The recent imposition of new tariffs on imported goods has created a challenging environment for both home builders and retailers across the United States. Danielle Kaye Jean Lin, owner of the store Colony, has expressed concerns over declining sales and increasing costs despite primarily selling US-made products. Anthony Cabrera only recently completed his home in Hopatcong, New Jersey. He was under enormous financial duress because of soaring construction materials costs.
Earlier in June, 2023, the federal US government announced new tariffs on concrete and other key materials used in residential renovation. This reflects imported kitchen cabinets, timber and wooden indoor furniture. As a result of these tariffs, many in the industry have been forced to reexamine their budgets and pricing strategies. Beyond that, all of Colony’s offerings were from the U.S. As Jean Lin illustrated, tariffs hit her business way before this summer, and she is losing the battle to keep prices from rising.
“As a retailer, it’s really hard to invest in anything when there’s unknowns, especially works of great value or works that are going to go in your home for a long time,” said Jean Lin.
Cabrera’s experience is an example of the reality these tariffs can create. He had initially allocated $300,000 for his own home project. Then, because of rapid price increases caused by tariffs, costs tripled to $450,000. He experienced the squeeze when he wanted to buy important products, such as couches, before the tariffs went into effect to still afford them at a lower price.
Tariffs were most certainly on my mind the entire time, Cabrera stated. “It was a concern every morning looking at prices, trying to figure out how to control the budget that kept increasing.”
Their consequence goes beyond single builders such as Cabrera. The broader construction industry is preparing for more severe financial impacts. Matthew Walsh, a housing economist at Moody’s Analytics, underscored the unpredictable cost impact the new tariffs will entail. This doubt will be the short term impact on residential construction.
Buddy Hughes, chairman of the National Association of Home Builders, voiced concerns about how these tariffs could hinder construction efforts across the nation. What I heard from Elena Patel, co-director of the Urban-Brookings Tax Policy Center, was a passionate worry that … To close, she stressed the great precariousness affordable housing construction is up against.
Even the largest manufacturers of home goods are beginning to take hits. Earlier this month, IKEA notified its customers that the latest batch of tariffs would force the retailer to raise prices. RH—formerly Restoration Hardware—has anticipated $30 million more in tariffs. This impact will land on them in the second half of this year.
Michael Trubrig, co-owner of a retail business, stated, “We had to raise prices because we couldn’t lower the margin.” Trubrig further commented on the state of the market: “It’s not business-ending, but it’s not healthy, either.”
Some home builders, economists and industry experts think that this tariff disaster can be avoided. Everybody understands that they will have significant impacts. Jake Krimmel, a senior economist at Realtor.com, remarked, “It’s not a catastrophe for home builders.” He thought that maybe the cumulative effect of all of these costs increasing might just make it too hard on budgets to keep projects moving.
Peter Harrell, a visiting scholar at Georgetown Law School, warned about the precariousness of the housing market. He noted that it’s already in precarious shape. He noted, “This is adding onto an industry that has already seen its share of tariff increases.”
Each and every business is now contending with a fundamentally changed economic reality. Home builders and building supply retailers find themselves working hard amid a quickly changing and uncertain market. The cost of essential commodities is skyrocketing. This rapid acceleration is putting the pressure on people like Cabrera—and businesses like Jean Lin’s—to innovate faster, or be left in the dust.