For homebuilders, a collective sigh of relief—for now.
Just hours before steep new tariffs on Canada and Mexico were set to take effect, President Trump hit the brakes. His decision to pause the 25% tariffs on imports from America’s two biggest trade partners sent a wave of relief through the homebuilding industry, where fears of increased material costs had folks on edge.
But just so we don’t get too comfortable, the pause comes with a 30-day countdown. And if Trump doesn’t get what he wants on border security, a trade war could be back on the table.
Catch today’s Hot Sheet for Byron Lazine’s full breakdown of the news:
Here’s what you need to know.
What Just Happened?
On Saturday, Trump announced:
- 25% tariffs on imports from Canada and Mexico
- 10% tariffs on imports from China
The move was framed as a national security measure, aimed at curbing illegal immigration and drug trafficking rather than a long-term economic policy.
Then, just before the tariffs were set to hit at midnight on Monday, Trump paused them for 30 days—but only after securing new border enforcement commitments from both Canada and Mexico.
- Mexico: President Claudia Sheinbaum agreed to deploy 10,000 National Guard troops to patrol the southern U.S. border.
- Canada: Prime Minister Justin Trudeau rolled out a $1.3 billion CAD border plan, targeting fentanyl smuggling and organized crime.
Prime Minister Justin Trudeau highlighted the agreement between Canada’s government and Trump in a Tweet:
I just had a good call with President Trump. Canada is implementing our $1.3 billion border plan — reinforcing the border with new choppers, technology and personnel, enhanced coordination with our American partners, and increased resources to stop the flow of fentanyl. Nearly…
— Justin Trudeau (@JustinTrudeau) February 3, 2025
Homebuilders Dodged a Bullet—for Now
The homebuilding industry had been bracing for impact, with fears that new tariffs would jack up material costs and worsen the affordability crisis.
- 70% of softwood lumber used in U.S. home construction is imported from Canada.
- 70% of drywall gypsum comes from Mexico.
- Canadian lumber already faces a 14.5% U.S. tariff—Trump’s move would have pushed that to nearly 40%.
The National Association of Homebuilders (NAHB) laid out their concerns about the tariffs in a recent letter to the president.
“Tariffs on lumber and other building materials increase the cost of construction and discourage new development,” said NAHB Chair Carl Harris. Translation: Homebuyers would be footing the bill in the form of even higher home prices.
Realtor.com’s chief economist Joel Berner doubled down on that point:
New tariffs, especially on Canadian lumber, will directly add to the cost of new construction. We expect builders, who are very conscious of their margins to begin with, to pass these new costs along to buyers in the price of newly built homes.
A chart shared on X by John Burns Research and Consulting shows the “real implications for building material costs”:
🚨 New tariffs are coming, and they could have real implications for building material costs.
With construction costs already 40% higher than pre-pandemic levels, additional tariffs on imports could push prices up further, adding pressure to an already strained housing market. pic.twitter.com/eChFPyWBTQ
— John Burns Research and Consulting (@JBREC) February 3, 2025
Is This Just a Bargaining Move?
Not everyone is panicking. Some builders see this as Trump using tariffs as leverage rather than launching a full-blown trade war.
“Trump’s a business guy first, and he does things for shock and awe, because it works,” said Stephen Haines, president of Artisan Built Communities in Georgia.
Haines isn’t thrilled about tariffs, but he’s far more concerned about high interest rates and zoning regulations. “The tariffs could play a part in the affordability crisis, but to me, it’s not the most imminent threat.”
In today’s Hot Sheet, Byron Lazine referenced an X post by HousingWire’s Logan Mohtashami describing Trump’s use of tariffs as a negotiating tactic. For now, it seems to be working.
— Logan Mohtashami (@LoganMohtashami) February 3, 2025
What Happens in 30 Days?
That’s the real question. If Trump isn’t satisfied with Canada and Mexico’s border enforcement efforts, the tariffs could be back—harder and faster than before.
“As President, it is my responsibility to ensure the safety of ALL Americans,” Trump posted on Truth Social. “The Tariffs announced on Saturday will be paused for a 30-day period to see whether or not a final Economic deal with Canada can be structured.”
Meanwhile, the 10% tariff on China is still moving forward—so expect ripple effects in supply chains regardless.
