Trump's Steel Tariffs Threaten to Exacerbate Housing Crisis

President Donald Trump's newly imposed 25% steel tariffs are poised to further inflate construction costs, potentially driving up apartment rents and condo prices.

Impact on Higher-Rise Construction

Mid- and high-rise buildings, which require substantial amounts of steel, are likely to experience the most significant cost increases. Omar Rihani, executive vice president at Project Management Advisors, explains that the steel content per square foot increases significantly for buildings exceeding five stories.

Slowdown in Construction

As developers grapple with higher construction costs, they may delay or abandon projects, exacerbating the existing housing shortage. According to Multifamily Analytics, multifamily construction starts have already reached their lowest level in over a decade.

Rising Rents and Condo Prices

Developers are likely to pass on the increased costs to renters and condo buyers, pushing rents and prices even higher. Rihani estimates that construction costs could increase in the low single digits for high-rise developments.

Previous Tariff Impacts

In 2018, Trump imposed similar tariffs on steel, although Canada and Mexico were later exempted. Despite these exemptions, the tariffs elevated steel prices and construction costs. The Biden administration subsequently removed these levies.

Industry Outlook

Some industry experts are optimistic that strong demand for housing will mitigate the impact of the tariffs. However, any increase in construction costs could hinder efforts to address the housing shortage and reduce costs for homebuyers and renters.

Broader Tariff Impact

The steel tariffs are part of a broader tariff environment that also includes 10% tariffs on China and potential tariffs on key construction materials from Canada and Mexico. These tariffs could further increase inflation and keep interest rates high, further straining homebuilders and consumers.

Industry Response

The homebuilding industry has urged Trump to reverse course on the tariffs, arguing that they run counter to his goal of reducing housing costs. Developers are actively taking measures to mitigate tariff impacts, such as stockpiling lumber.