Anthony Cabrera breathed a sigh of relief when, three weeks ago, he purchased the last major items — couches — for his newly built home in Hopatcong, New Jersey. Mr Cabrera, who started working with a contractor in March to construct the three-bedroom house, was eager to get ahead of a fresh round of tariffs on key building materials and home items that took effect earlier this week. Mr Cabrera had already seen his initial budget of roughly $300,000 balloon to $450,000 as prices for a range of products, like cabinets from Asia, started going up since the spring. Earlier this week new US tariffs came in on items needed to renovate your home including imported kitchen cabinets, timber and wooden furniture. “Tariffs were definitely on my mind throughout the entire process,” said Mr Cabrera, who succeeded in finishing his build before the new tariffs, but still noticed rising prices in the run up. “It was a concern every morning looking at prices, trying to figure out how to control the budget that kept increasing,” he said.
Mr. Cabrera’s experience is one that most homebuyers, builders, and renovators are grappling with. While the White House says the tariffs will boost domestic manufacturing and protect national security, economists say they could intensify the US housing market’s woes by adding to President Donald Trump’s previous tariffs and slowing construction. “We’re in a fairly weak position in the housing market to begin with,” said Peter Harrell, a visiting student at Georgetown Law School. “The last thing that isn’t already a large new construction market needs is higher entry costs.” He added: “This is adding onto an industry that has already seen its share of tariff increases.” Other levies Trump imposed this year included a 50% tariff on steel and a 50% tariff on copper imports, which have raised costs for building materials such as copper piping.
Affordability Concerns Mount The levies are the latest in a slew of measures that economists warn could continue to push up prices for people around the world. A recent Goldman Sachs report found that US consumers will forgo as much as 55% of the cost of Trump’s tariffs this year. It takes time to raise prices on consumers, the economists noted, and US firms will increasingly pass on costs in the coming months. Even before the new tariffs took effect this week, furniture companies had been warning about a hit from tariffs. In April, the chief executive of RH, formerly known as Restoration Hardware, reacted with an explosive statement as he watched his company tumble in response to a major tariff announcement from the White House. RH said in September that it will face $30 million in new tariff costs in the second half of this year. The company also delayed the release of a design catalog, citing uncertainty about pricing due to tariffs.
And executives at the furniture retailer IKEA, which is known for being budget-friendly, warned this week that tariffs might force the company to raise prices. It imports most of the products it sells in the US.
Danielle KayeJean Lin, the founder of a design gallery for furniture and home decor, said she is less exposed to tariffs than some other businesses in her industry. Most of the furniture she sells, in partnership with independent designers, is made in the US. But her Manhattan-based cooperative, Colony, has still felt the pinch of tariffs since this spring. Homeowners and interior designers have scaled back purchases and projects because of tariff-related uncertainty, which has taken a toll on her sales. “It’s really hard to invest in anything when there are unknowns, especially works of great value or works that are going to be in your home for a long time,” Ms. Lin said. Material costs had also been rising, even before the latest round of tariffs. Ms. Lin said that a US-based millworker, with whom she is collaborating on an interior design project, imports his materials—and those he keeps are more expensive.
That could mean higher prices for consumers down the line. “The next project he does, whether it’s ours or someone else’s, he’ll quote accordingly,” she said. “If construction fees are going down, if material costs are going up, his architect and interior designer’s fees are going up.” At Stillfried Design in lower Manhattan, prices for furniture made in Germany and Austria rose by nearly 15% this summer to account for broad-based tariffs on European imports and tariffs on steel. Michael Trubrig, who co-owns the business with his wife, said, “We had to raise prices because we couldn’t lose the margin.” He doesn’t expect the new furniture tariffs to affect him, because of a trade agreement capping tariffs on the European Union at 15%. But the broader tariff landscape continues to present a hurdle. “It’s not business-ending, but it’s not healthy, either,” Mr. Trubrig said.
‘Yet Another Dislike’ High mortgage rates have weighed on new home sales in recent years. The new tariffs on imported timber, lumber, kitchen cabinets, and furniture “will create additional headwinds for an already challenged housing market by further raising construction and renovation costs,” Buddy Hughes, chairman of the National Association of Home Builders, said in a statement. Affordable housing construction could be hit particularly hard, said Elena Patel, co-director of the Urban-Brookings Tax Policy Center.
She said that as material costs rise, the cost of new housing development will increase, too, which could in turn prompt developers to rethink low-margin affordable housing projects. Matthew Walsh, a housing economist at Moody’s Analytics, said the cost of uncertainty will be the most immediate effect of this week’s homebuilding tariffs, especially since the levies are poised to drown again in January. Some economists say that furniture and glove tariffs alone are not enough to spell disaster for builders and tank the homebuilding market. “It’s not a catastrophe for homebuilders,” said Jake Krimmel, a senior economist at Realtor.com. “It’s still another unknown they have to deal with right now.”