The U.S. is currently facing a significant housing shortage, with millions of units needed to meet demand. Families across the country are grappling with historically high rents and home prices, making affordable housing a critical issue. The Trump administration has set a goal to reduce the cost of living and make housing more affordable, even considering a declaration of a national housing emergency. However, recent policies have introduced new or elevated tariffs on essential construction materials such as lumber, gypsum, steel, and various household items like kitchen cabinets and bathroom vanities. These tariffs increase costs across the board, affecting new construction, renovations, and affordable housing development.
Using the tariff model from the Urban-Brookings Tax Policy Center, it is estimated that current tariffs, including those recently announced, will add approximately $30 billion to the costs of residential structures. About 90% of these increased costs will impact the construction of new homes, including apartments. Homeowners undertaking renovations or regular maintenance will also feel the financial strain. Additionally, the prices of major appliances and furniture have already increased significantly, with major appliances rising more than twice as fast as overall inflation and living room, kitchen, and dining room furniture increasing by over 75% faster than inflation.
These costly tariff policies risk deepening the existing housing crisis. Temporary or targeted tariffs can be justified to safeguard critical industries or respond to unfair trade practices. U.S. trade law provides two main paths for such actions. The first is Section 232 of the Trade Expansion Act of 1962, which allows the executive branch to impose tariffs when imports are claimed to threaten national security. The second path involves countervailing and anti-dumping provisions under the Tariff Act of 1930, designed to counter unfairly priced or subsidized imports.
Tariffs on steel and aluminum follow the national security path, with the Trump administration imposing Section 232 tariffs of 25% in 2018, citing national security concerns. The Biden administration largely maintained these tariffs, with some negotiated adjustments, and the second Trump administration doubled down on them. The national security rationale behind these tariffs has been controversial, with questions raised about the legitimacy of the risks they were meant to address.
Historically, tariffs on lumber have followed the second track, with U.S. officials imposing anti-dumping and countervailing duties on Canadian softwood lumber. The Trump administration introduced a new approach in 2025 by taking lumber and its derivative products down the national security track. This order imposes a 10% tariff on softwood timber and lumber, 25% on upholstered wooden products, and 25% on kitchen cabinets and vanities, effective October 14. These tariffs are scheduled to rise again to 30% and 50% on January 1, 2026.
The Trump administration has also used the International Emergency Economic Powers Act (IEEPA) to levy broad duties on imports from Mexico, Canada, and China. These tariffs apply to a wide range of products, adding another surcharge to many building materials that the U.S. imports in large quantities. Gypsum, a mineral used in drywall, illustrates the risk to residential construction from IEEPA tariffs, as more than half of U.S. gypsum imports come from Canada and Mexico. Doors, windows, and frames face similar tariff pressures, with a significant share of the U.S. supply coming from Canada and China.
These layered tariffs add significant costs to housing construction. The U.S. housing shortage is severe, with estimates ranging from 3 to 5 million units. Freddie Mac‘s latest analysis puts the deficit at about 3.7 million units, while Brookings research estimates the gap to be 4.9 million. The Harvard Joint Center for Housing Studies highlights that new multifamily development is slowing despite record rents due to higher costs, and nearly half of renters are cost-burdened, spending over 30% of their income on housing. The problem is even more acute at the bottom of the market, with a shortage of over 7 million affordable rental homes for extremely low-income households.
Federal and state programs are working to relieve the housing shortage, with efforts to lower the cost of housing and expand supply. These include the recent expansion of the Low-Income Housing Tax Credit, block grants supporting housing and zoning reforms, and infrastructure investments designed to encourage new construction. However, tariffs on essential building materials cut against these efforts, adding costs and slowing production. If the goal is to make housing more affordable, trade policy should support U.S. housing policy rather than working against it.
