How Trump’s Tariffs and Immigration Policies Could Make Housing Even More Expensive
President Donald Trump owes his second electoral victory, in no small part, to voter frustration over the rising cost of living. Over the course of Joe Biden’s presidency, the price of a typical American house increased by nearly 40 percent, and rents followed a similar trajectory. As of 2024, approximately 771,480 Americans lack reliable shelter—at once a new high and a new low.
All of these issues are most acute in states governed by Biden’s fellow Democrats. In California, the median home price is now more than 10 times the median household income. Economists generally view three to five as a healthy ratio.
Polling data suggest that many key voting blocs in the 2024 presidential election were primarily motivated by the rising cost of living and by out-of-control housing costs in particular. For all the network news preoccupation with transgender athletes and campus protests, it was mortgages and rents—the single largest line items in a typical household’s budget—that moved voters to toss out incumbents.
On April 2, after months of empty threats and false starts, the administration finally launched its global trade war, including a 25 percent tariff on various goods from Canada and Mexico. But Canadian softwood lumber and Mexican gypsum used for drywall—the (literal) pillars of a typical American single-family home—would be exempt.
The National Association of Home Builders (NAHB) was quick to celebrate it as a win: Canada accounts for 85 percent of all U.S. lumber imports. If the tariffs had taken effect as planned, the per-unit cost of a home might have increased by as much as $29,000. In a sector characterized by thin margins, that would have meant a lot of idle construction sites.
And yet the partial rollback will offer only a temporary reprieve. Tariffs already in effect will increase the cost of a new home by $10,900 on average, according to an April 2025 estimate by the NAHB—an increase of $1,700 over its March estimate. This is on top of a 41.6 percent increase in building materials since 2020, brought on by pandemic-related supply chain disruptions.
Those cost increases could hit renters hardest. After a decade of underbuilding in the wake of the 2008 financial crisis, America is short roughly 5 million homes—most of them apartments. Perhaps the most robust finding in urban economics is that when vacancy rates increase, rents fall. But driving up vacancy rates requires cities to build more housing.
Thanks to the YIMBY (“yes in my backyard”) movement, a handful of cities—including Austin and Minneapolis—have recently had building booms that have brought prices back down. But those cities have been the exception.
Meanwhile, a new wave of tariffs is about to make it a lot more expensive to build.
On February 11, the administration imposed a 25 percent tariff on steel and aluminum—much of it imported from allies such as Brazil and Germany. On February 25, the administration announced an investigation into copper imports, presumably with future tariffs in the works. Depending on their country of origin, other key inputs like iron and cement are also now subject to steep tariffs.
Even if you can get new housing built, the appliances needed to make all these
Article from Reason.com
The Reason Magazine website is a go-to destination for libertarians seeking cogent analysis, investigative reporting, and thought-provoking commentary. Championing the principles of individual freedom, limited government, and free markets, the site offers a diverse range of articles, videos, and podcasts that challenge conventional wisdom and advocate for libertarian solutions. Whether you’re interested in politics, culture, or technology, Reason provides a unique lens that prioritizes liberty and rational discourse. It’s an essential resource for those who value critical thinking and nuanced debate in the pursuit of a freer society.
