April 20, 2025 | When we hear the word tariff, many think of global trade disputes, cargo ships crossing oceans, or policy debates in distant capitals. But while the mechanics of tariffs may seem remote, their effects hit close to home, especially when it comes to the cost of building or improving residential property. Tariffs on construction materials are nothing new. Over the years, various administrations have imposed targeted measures such as those on Canadian softwood or Chinese steel, typically designed to protect specific U.S. industries. These actions were, however, very limited in scope and geography. What’s different now is the sheer scale and unpredictability. We’re entering uncharted territory marked by sweeping and inconsistent declarations against a wide range of global trading partners. Based on the highly controversial metric of overall trade deficits, what was once isolated is now being applied broadly, impacting nearly every product used by builders and homeowners that isn’t entirely domestically made. The list is extensive, as will be the consequences. Imported materials play a vital role in residential construction. According to the National Association of Home Builders (NAHB), roughly 10% of materials used in homebuilding are imported. Nearly 75% of imported lumber comes from Canada, and a similar percentage of drywall’s core component – gypsum –comes from Mexico. When these materials are hit with tariffs, the cost pressures on builders rise significantly. The NAHB estimates that tariffs could add over $9,200 to the price of an average new single-family home. Zelman & Associates forecasts this figure could climb as high as $25,000 in some markets.
These price increases come at a precarious time. The U.S. already faces a shortfall of roughly 4 million new homes needed to meet demographic demand. For many prospective buyers, affordability is already stretched thin. Tariffs only widen the gap. Renovation projects affected, too.
And it’s not just new construction that’s affected. In the resale market, higher renovation costs will discourage homeowners from investing in improvements, whether to enhance their living experience or prepare a home for sale. Everything from cabinetry and countertops to roofing and plumbing fixtures often relies on imported components. For builders, especially those focused on mid-market or entry-level housing, these material cost hikes can be deal breakers. Margins are thin, and uncertainty about sourcing and pricing makes it difficult to break ground with confidence. In Southwest Florida, for example, many merchant builders are already holding more completed, unsold inventory than desired because of a tepid pace of sales. While the pricing of existing inventory is locked in, future builds face murkier economics. How can developers plan without clarity on costs, availability, and how to price homes for the public? Another potential impact of tariffs may be felt in mortgage rates, which generally track the yield on the 10-year U.S. Treasury note. In periods of global uncertainty, investors typically seek the safety of U.S. government bonds, driving yields, and consequently interest rates, lower. However, after a brief dip, the 10-year yield has reversed course and moved higher amid growing global skepticism about U.S. economic policy. Foreign investors are increasingly questioning America’s status as a reliable safe haven, a sentiment also reflected in the weakening of the dollar. In this shifting environment, all eyes will be on how the Federal Reserve chooses to respond.
No discussion of tariffs and Florida real estate would be complete without acknowledging the critical role of Canadian buyers. For decades, Canadians have been integral to our housing market, especially along the Gulf Coast, contributing to community vibrancy, tourism, and property tax revenue. According to the National Association of Realtors, Canadians account for approximately 11% of all foreign homebuyers in the U.S., with Florida consistently ranked as their top destination. Canadians feeling unwelcome Yet, recent trade tensions have chipped away at that relationship. Beyond the economic impact, rhetoric and policy decisions perceived as antagonistic have left many Canadians feeling unwelcome. In neighborhoods across our markets, including likely your own, it’s not uncommon to see “For Sale” signs on properties owned by Canadians who have decided they’ve had enough. Even when policies shift at a point in the future, some may not return, choosing instead places like Mexico or the Caribbean, where they feel more valued. I’m hopeful that’s not the case and implore all reading this article to remind our northern neighbors just how much they are respected and appreciated. Let’s be candid: Our world just became a little more complicated, and frustrations are amplified when challenges are self-inflicted. But as I often remind our global advisers: All things are temporary. Markets adjust. So do people. With timing, intention, and trusted guidance, opportunities abound amid the noise. Tariffs introduce another layer of uncertainty, yet people will always seek the comfort, security, and sense of belonging that a home provides. And here in Florida, we remain one of the most compelling places to find just the right one.
Budge Huskey is chief executive officer of Premier Sotheby’s International Realty.
