In a recent discussion, St. Thomas economics professor Tyler Schipper elaborated on the impact of newly imposed tariffs by President Donald Trump on the construction industry. These tariffs, affecting goods from Canada, Mexico, and China, may not deliver the desired affordability. Schipper pointed out that while some voters support these measures, they may not yield long-term benefits and could disproportionately burden industries already facing cost pressures.
Schipper noted that tariffs could raise home construction costs as about 7% of the materials used in building homes are imported. Although cost increases are likely, the broader spectrum of price pressures—including labour and materials—must also be considered. Interestingly, the average size of new homes in the U.S. has decreased over the years, illustrating how builders adapt to rising costs and shifting consumer affordability.
When asked about the differences in response from the construction industry regarding multifamily housing versus single-family homes, Schipper highlighted the challenges in multifamily construction. The market is currently oversaturated, making it difficult to sell newly constructed units. Despite these hurdles, residential construction has been crucial in providing inventory for buyers constrained by existing mortgages.
Schipper spotlighted historical tariffs’ impact, recalling the Great Depression and the more recent 2018 tariffs on washing machines, which inadvertently increased prices for related appliances, like dryers. This underscores the interconnectedness of goods in construction, as many essential household devices also stem from international markets and contribute to rising homebuilding costs.
Tariffs imposed by President Trump are set to affect home building, as discussed by St. Thomas professor Tyler Schipper. He noted that tariffs on imports, which account for roughly 7% of home costs, could intensify existing price pressures. Despite challenges in multifamily construction, residential building remains vital. Schipper recalled historical tariff impacts to highlight potential current market consequences.
In conclusion, Professor Tyler Schipper’s insights reveal the complex relationship between tariffs and home construction costs. While tariffs are intended to support domestic industries, their adverse effects may outweigh benefits in the short and long term. The construction industry is already grappling with multiple cost pressures, and any additional burden could lead to smaller homes and fewer multifamily projects. As the market navigates these challenges, understanding historical tariff impacts can offer valuable lessons for the current landscape.
Original Source: finance-commerce.com
