U.S. tariffs have long been a policy tool for protecting domestic industries and addressing trade imbalances. However, they also come with significant economic consequences, particularly in sectors that rely on imported materials. The construction and rehabilitation industries are among those most affected by tariffs, as they rely on various imported goods, including steel, lumber, aluminum, and machinery.
The National Association of Home Builders (NAHB) has warned that Trump’s 25% tariffs on Mexico and Canada would directly increase the cost of building materials — and that those costs would be passed on to buyers. By the same token, those same expenses are going to be passed on to contractors in our Industry, without compensation, form Management. On 04 March 2025, the hammer is dropping and almost all of the materials necessary to fuel the ongoing operations within the SFR channel as well as the day-to-day tasks required within the REO channels. When it comes to our Industry, fact of the matter is there are two components: the real estate side, which handles the sales, and the undertakers whom resurrect the assets and prepare them for sale. Both, though, are tethered by both interest rates which impact the sale and inflation which impacts the ability to perform services upon the assets.
When combined with the ongoing fraud, waste, and abuse of which Foreclosurepedia has documented for nearly a decade and a half, the reality is even those hardened contractors still wishing to remain in the Industry cannot continue to do such with less than 18 cents on every dollar going to Labor and more than 82 cents of every dollar going to Management.
Two essential materials used in new home construction, softwood lumber and gypsum (used for drywall), are largely sourced from Canada and Mexico, respectively.
- Of $8.5 billion worth of sawmill and wood products imported in 2023, nearly 70% of these imports came from Canada. Many of these imports are already subject to a 14.5% antidumping and countervailing duties (AD/CVD) tariff. Total imports of sawmill and wood products from Canada totaled $5.8 billion.
- The U.S. imported $456 million worth of lime and gypsum products in 2023, with 71% of these products originating from Mexico. Imports of lime and gypsum products from Mexico totaled $352 million in 2023.
Some of our Clients are experiencing booms in their SFR channel. One firm, based out of Florida is batting 1000 when it comes to bid submission approvals. It is important now, more than ever, to have your process down and relationships built.
The U.S. has and will raise imposed tariffs on steel and aluminum imports, particularly from countries like China. Since steel and aluminum are primary materials for commercial and residential construction, these tariffs significantly increase costs.
- Structural Steel: Used in high-rise buildings, bridges, and industrial facilities, steel price hikes raise overall project expenses.
- Rebar and Sheet Metal: Essential for concrete reinforcement and roofing, these materials become more expensive due to import duties.
- Aluminum Components: Doors, windows, and cladding rely heavily on aluminum, and tariffs drive up these costs, making projects pricier.
Tariffs on Canadian lumber have led to fluctuations in wood prices, directly affecting:
- Framing and structural components in residential housing.
- Plywood and engineered wood used in flooring and cabinetry.
- Decking and fencing materials, making outdoor rehabilitation projects more expensive.
Construction and rehab projects require imported tiles, plumbing fixtures, and electrical components, many of which come from China and Mexico. Tariffs on these products make home renovations and commercial remodeling more costly.
Tariffs often lead to retaliation from other countries, causing further supply chain disruptions. Many construction firms depend on a global supply chain for materials and machinery, and tariffs can cause:
- Delays in shipments due to import restrictions or trade negotiations.
- Increased demand for domestic alternatives, leading to shortages and price hikes.
- Higher transportation costs if companies shift sourcing to new countries further away.
- For example, restrictions on Chinese electronics impact HVAC systems, security devices, and smart home technologies, leading to project slowdowns.
Tariffs are a foregone conclusion when it comes to the Trump Administration’s economic policy. How Labor and more specifically the International Association of Field Service Technicians (IAFST) chooses to address how the tariffs impact Labor. Moreover, though, the massive spike in inflation, as both the federal layoffs and tariffs have been discussed, is having a negative impact both upon home sales and the ability to field workers upon new construction and rehabs — both public and private channels. PCE inflation has hit 4%, month-to-month, and combined with the massive losses on the Dow, it does not bode well for Labor. Pending home sales — a forward-looking indicator of “closed sales” of existing homes to be reported over the next couple of months — dropped by another 4.6% in January from December, seasonally adjusted, and carved out a new all-time low in the data going back to 2010, according to the National Association of Realtors. Where we end up, by the time our Industry hits full swing this season depends a lot upon whether Labor can afford to even turn on their vehicle.
