How Trump’s New Tariff is Going to Affect Real Estate

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If you haven’t already heard, Trump announced earlier this year that he would be imposing a 25% tariff on steel imports and a 10% tariff on aluminum imports. While the motivations as to why he would do this are unclear, what is clear are the likely effects that this move would have on the economy, and more importantly, the consumers.

I think it goes without saying that any industry that has anything to do with steel and aluminum is going to see an increase in production costs. And how do they intend to mitigate such a circumstance? They pass the burden on to the buyers, of course. Don’t get me wrong, though. It’s a perfectly normal thing to want to preserve your business.

And the real estate industry is no exception to this trend.

But is it really going to be a significant increase in price?

 Well, the answer is the one everybody hates to hear—it depends.

Most private houses in the United States are dominantly made of wood. This is itself means that the tariffs aren’t exactly going to raise house prices by much, especially considering that steel and aluminum make up about 0.5% to 1% of a home construction project’s total cost.

On the other hand, apartment complexes and condominiums require much more steel and aluminum in their construction (they are, after all, going to be put under much more weight versus private homes). Naturally, this is going to increase construction costs, as well as buyer purchase and rental costs.

But, it’s still nothing compared to how the tariff on lumber affected the economy.

According to this article, the trade tariffs on lumber between the United States and Canada have added as much as $3,000 to the average total construction cost of an American home. Canada lumber imports make about 28% of all lumber sales in the US per annum.

But these tariffs aren’t all that bad, depending on which end of the plane you find yourself at.

For instance, while this may indeed be disadvantageous to buyers, the increase in construction costs also translates to an increase in how property owners may sell or rent out their properties. Couple that with this article that lists the best cities to invest in real estate and you’ve got a recipe for mad profit.

The reason for this is that shelter and security are both primary needs for any person. This can easily be misconstrued as taking advantage of the needs of the people, but in all truth, all of this is merely an attempt to negate the additional expenses that the tariffs present. It’s just how business has always been.

And that very nature isn’t going to change any time soon. For, what else is there to do other than to keep up with the times and to simply adapt to the world we live in?

However, the tariffs may also bring some good.

This comes in the form of the creation of new jobs in order for companies to break free from being import-dependent. So, if you look at this from a different perspective, perhaps these tariffs aren’t so bad in the long run after all.