The recent announcement by the Trump administration to impose a 25% tariff on imports from Canada and Mexico has left many in the construction industry uneasy. The decision is expected to significantly impact the cost of building materials, especially in states like New York, where construction projects are heavily dependent on materials sourced from these neighboring countries.

“The challenge in talking about this was to describe it with words that wouldn’t get me in trouble with the FCC,” said Mike Elmendorf, President and CEO of the Associated General Contractors of New York State. “It is a terrible idea.” Elmendorf’s frustration echoes the sentiments of many industry leaders who believe these tariffs could slow down growth in construction and infrastructure projects.

Impact on Lumber and Building Materials

One of the most significant impacts of the tariff is the increase in the cost of softwood lumber, a critical material used in residential and commercial construction. Elmendorf explained that a 25% tariff on Canadian lumber would likely prompt American suppliers to raise their prices by 20% or more. This ripple effect could have profound consequences on builders’ bottom lines, as costs for raw materials like lumber have already been climbing due to supply chain issues caused by the COVID-19 pandemic.

“You put a 25% tariff on Canadian lumber, guess what happens? American suppliers, domestic suppliers raise their costs by like 20%,” Elmendorf said. “This is exactly what we don’t need when we’re trying to get projects off the ground.”

According to the National Association of Home Builders (NAHB), more than 70% of softwood lumber comes from Canada, and a significant portion of the gypsum used in construction is sourced from Mexico. These two materials are crucial to building homes and commercial properties, making the tariffs a major concern for the entire industry.

Financial Strain on Homebuilders

The imposition of tariffs is also expected to affect homebuilders, especially in the affordable housing sector. Many homebuilders rely heavily on Canadian lumber and Mexican gypsum to keep costs manageable. When prices for these materials increase, it raises the overall cost of building a home, which could result in fewer affordable homes being built in the region.

“You know, and what happens when the cost of construction projects goes up? You end up with less of them, you have projects that end up not being viable,” Elmendorf warned. This concern has been echoed by builders across the state who fear that the tariffs will push construction costs beyond the reach of many potential homeowners, especially in a market already strained by housing shortages.

Nonprofits Struggle with Rising Costs

The tariffs are also creating uncertainty for nonprofit organizations such as Habitat for Humanity, which relies heavily on affordable materials for its housing projects. According to Christine Schudde, Executive Director of Habitat for Humanity Capital District, nearly all of their lumber comes from Canada. She emphasized that the new tariffs could make these materials prohibitively expensive, delaying their ability to complete much-needed housing for low-income families.

“For us, just about 100% of our lumber comes from Canada,” Schudde said. “It’s going to be much more expensive.” She explained that eight homes currently in predevelopment have not yet secured lumber, and the rising costs could derail the timeline for these projects. “This could have a real impact on projects, starting as of this spring,” Schudde added, stressing that the tariffs could lead to delays and increased costs for the organization.

Effect on Ongoing Projects and Jobs

Beyond material costs, the tariffs could have a devastating effect on ongoing projects. Elmendorf argued that the move could stop projects in their tracks due to rising costs and increased uncertainty.

“It is an absolutely stupid policy,” Elmendorf said. “It is going to cost jobs. It is going to cost lots of money, and it is going to stop projects that are currently in the pipeline in New York and elsewhere around the country.” Builders fear that stalled projects could lead to job losses, especially in the highly competitive construction labor market, where skilled workers are already in short supply.

The concern is compounded by the fact that many construction firms are already grappling with a limited workforce and supply chain disruptions. These new tariffs could exacerbate existing issues, slowing down construction timelines and pushing projects beyond their budgets.

Trump Administration’s Support from Other Industries

Despite the concerns from the construction industry, the Trump administration has received praise from certain sectors. For example, Nucor, a North Carolina-based steel company, issued a letter of support for the tariff policies, applauding the administration's efforts to protect American manufacturing.

“Nucor applauds the first steps taken by President Trump in his America First Trade Agenda,” the company’s president stated. “We look forward to working with POTUS to enforce our trade laws & strengthen American manufacturing!”

While some industries celebrate these tariffs, many in construction see them as a setback for the sector, one that could slow the recovery and growth of the U.S. economy. The debate continues to intensify as builders, nonprofit organizations, and businesses in the construction sector prepare for the long-term consequences of these new trade policies.

The Road Ahead for Builders in New York

As the Trump administration’s tariffs move forward, many are calling for alternative solutions that would not harm the construction industry. Leaders like Elmendorf are urging policymakers to consider the real-world impact these tariffs will have on local economies and projects that are vital to New York’s growth.

“We need to think carefully about the unintended consequences of these policies,” Elmendorf stressed. “Builders are the backbone of New York’s infrastructure, and we can’t afford to see these policies push projects and jobs out the door.”

The next few months will be critical for the construction industry as it faces the reality of these new tariffs and the potential fallout they could create for builders, homeowners, and nonprofit organizations alike.