Most Americans are now aware of the “trade wars” that are currently getting a lot of coverage in the news, and are undoubtedly wondering how they might be affected by the new policies. While the U.S., Canada, Mexico, Europe and China flex their muscles, it’s the everyday consumer who will ultimately pay the price.
If you are thinking about a remodeling project or building a new home, it’s a good idea to get those wheels turning sooner rather than later, as many industries have already begun to increase prices on their products and services in anticipation of more costly goods and materials. Due to recently implemented tariffs, the cost of basic construction materials is expected to increase significantly — steel products by 25% and aluminum by 10%.
Steel beams, columns, steel framing members, masonry lintels, roof flashing, aluminum siding, HVAC ductwork, kitchen appliances, furnaces and a/c condensers, electrical conduit, wire, electrical panel boxes, electrical meters, gas meters, gas pipe, plumbing fixtures, faucets, electrical devices and light fixtures are just a few materials and goods that will be directly affected by tariffs already in place. Even the price of nails and screws will be affected by these tariffs. This list does not even take into account the non-direct costs like saw blades, drill bits and tools used by carpenters on the job site, or saw mills that produce lumber. If these tariffs remain in place for the long term, we can expect to see price increases on materials that do not contain steel or aluminum, but rely on those materials for their production.
The Trump administration has suggested that new tariffs on Canadian goods will be imposed in the near future. One of the largest imports from Canada to the U.S. is soft lumber. Most of the dimensional lumber used to build a project comes from Canada. Typically, the price of soft wood lumber increases in the spring in anticipation of the summer building season. With recent aggressive increases in the lumber market and additional tariffs, we can expect those prices to increase even more. Random Lengths, a weekly publication that tracks the North American forest products market, recently reported a 46% increase in the framing lumber composite price from last year. New tariffs may add another 20%. Lumber is a significant component for most projects, and these cost increases will definitely be felt by the end consumer.
Typically, the price of building a home or doing a remodeling project increases at a rate of about 3% each year. The tariffs noted above could easily increase prices for completed projects by 10% or more, and those increases will come steadily over the next 6 months. That means a project that is quoted today for $250,000 could easily cost over $275,000 in the very near future. As the “trade war” continues to imbue uncertainty into our markets, we can expect that other building costs may be affected before it is over. Homeowners considering a remodeling or building project should pay close attention to the significant costs of waiting as opposed to locking in a project and price today.