In 2025, the U.S. housing market has once again been impacted, albeit indirectly, by trade policy. That is, the Trump tariffs, construction, and mortgage rates are issues concerning builders, homeowners, and investors alike. The tariffs created economic uncertainty, which led to fluctuating mortgage rates, and recent declines have also provided a temporary reprieve (e.g., decreasing rates by 0.20% from recent data (6.75% to 6.55%).
While tariffs often seem like disconnected international decisions, they affect us much closer, and literally. Tariffs affect (i.e., push up) the cost of imported building materials, which can affect costs of projects, delays, and nearly every aspect of the mortgage, all of which affect the greater economy.
This article will summarize how tariffs work, clarify the housing market impact of tariffs on today’s housing market, and examine how all these tariffs impact your next home, investment, or renovation project.
What Are the New Trump Tariffs?
In late 2024 and into 2025, the Trump administration re-established and expanded tariffs on a number of Chinese imports. This specifically includes building materials, such as steel and aluminum, lumber products, and plumbing fixtures.
Key Points:
· Steel and aluminum tariffs: 10%–25% – all things from framing to appliances
· Finish materials: Tiles, fixtures, and cabinets from China are subject to duties of 15%–25%.
· Broader manufacturing goods: raise the cost of equipment and tools that contractors use.
These tariffs are aimed at protecting U.S. manufacturing and lowering our reliance on China. However, the short-term result is an increased cost for builders and developers.
Trump Tariffs and Building Materials Costs
Expenses for building materials, along with impacts on supply chains from Trump’s tariffs, have heightened prices and volatility in many cases.
· Steel price impacts: With tariffs, U.S. steel mills can increase their prices, now and forever. So, any product with steel as an input, such as beams, rebar, appliances, and HVAC, will feel the effect of tariffs.
· Lumber price volatility: While tariffs are officially directed at China specifically, tariffs have exacerbated global supply shortages, which have applied price pressures throughout the Canadian lumber industry.
· Fixtures and finishes: Many U.S. homes are built with imported plumbing fixtures, tiles, and cabinets, for example. Higher tariffs, higher prices for wholesale.
According to a 2025 NAHB survey, builders indicate that average construction costs tariffs have added 6–10 % percent to the cost of new single-family home builds compared to pre-tariff levels.
How Tariffs Affect Construction Timelines
Price hikes aren’t the only problem. Tariffs create uncertainty that slows projects.
· Suppliers hedge inventory, fearing price spikes.
· Builders delay orders while costs stabilize.
· Customs and compliance paperwork increases lead times.
Housing Market Impact of Tariffs
So, how do these increased costs translate into impacts on the broader housing market from tariffs?
· Higher house prices: Builders are going to pass those increased costs on to buyers, which hits affordability, especially for first-time buyers.
· Lower supply/less construction: Small developers may cancel their projects or marginally scale back their projects. With less new inventory, it will contribute negatively to the current housing shortage.
· Slower renovations: Tariff impacted materials are already making home improvement projects more expensive, which will decrease the desire for remodeling projects.
Even small percentage increases matter a lot in already hot markets like California, Texas, and Florida, where current affordability crises are in full effect.
How Tariffs Affect Mortgage Rates
While tariffs don’t directly change loan terms, they can influence how tariffs affect mortgage rates through broader economic channels.
· Inflation pressures: Tariffs affect prices across the economy and may prompt the Fed to hold rates higher for longer to combat inflation.
· Economic uncertainty: Trade tensions create uncertainty, slow growth, and increase the volatility of rates as central banks respond to risks.
· Investor behavior: Global investors may demand a higher yield on U.S. mortgage-backed securities if they see an increased risk of inflation.
Key Insight: Mortgage rates, which peaked at 7.04% in January 2025, have hovered between 6.75% and 6.9% since May, according to Freddie Mac data
Case Study: The 2018–2020 Tariff Era Lessons
This isn’t the first time the United States housing market has experienced a tariff shock. From 2018 to 2020:
· The Trump administration instituted broad tariffs on both steel and aluminum.
· Canadian lumber tariffs led to a 20%-30% increase in lumber prices.
· Average new home prices increased by $9,000-$15,000 due to cost increases related to tariffs.
These historical developments show that tariffs can have real impacts on housing affordability and builder confidence.
Strategies for Builders and Buyers in 2025
If you are building, purchasing, or renovating in 2025, you cannot control tariffs, but you can plan.
For builders:
– Lock in prices with suppliers as early as possible.
– Choose multiple suppliers with diverse materials to avoid most tariff impacts.
– Have thoughtful discussions with clients related to potential cost changes.
For buyers:
– Get pre-approved for mortgage loans to lock in mortgage interest rates ahead of further hikes.
– Address higher construction costs in your budgets.
– If building custom, be flexible with the timeline and materials.
Face it- thoughtful, advanced planning may be the way to mitigate the impacts of Trump tariffs, construction, and mortgage rate hikes!
Policy Outlook: Will Tariffs Stay?
While the administration frames tariffs as necessary economic defense, many industry groups are pushing back.
· Homebuilders’ associations warn that they worsen the affordability crisis.
· Economists argue they’re inflationary at a time when the Fed is trying to cool prices.
· Allies and trade partners see them as trade barriers, risking retaliation.
Whether these tariffs remain, expand, or get scaled back will be a key policy debate going into the 2026 elections.
Conclusion
The future of Trump tariffs would affect construction, home affordability, building timelines, and mortgage rates in 2025 and beyond.
Tariffs on building materials might support some domestic industries; however, this support comes at the expense of pricing builders and buyers at an incremental cost of using these materials. In addition, the inflationary pressures of tariffs may keep mortgage rates higher for longer.
For anyone considering a build or purchase in 2025, it is important to remain updated, plan anticipated timelines, and budget for these expenses.
FAQ’s
Trump tariffs on building materials increase the cost of construction for new homes by raising the costs of imports, primarily steel, aluminum, and various fixtures, by 5 percent to 10 percent in the overall construction costs for new homes.
Indirectly, yes. Different ways that tariffs can affect mortgage rates involve pushing inflation higher and leading the Fed to keep rates higher to cool off the economy.
Tariffs force builders to pay more for materials, reduce the amount of new housing coming into the market, and increase home prices, making affordability issues worse for buyers.
Steel and aluminum, lumber (through global ramifications), plumbing fixtures, and cabinetry (imports) see the highest hike in Trump tariffs and building materials costs.
Builders can lock in pricing with suppliers early and diversify their sources. Buyers should include higher costs in their budgeting and swiftly secure the mortgage rates before it’s too late.
