How the Chinese Tariffs are affecting Home Building
A 25% tariff on Chinese goods was proposed in Fall of 2018 and began to have a major impact on the new construction and remodeling industry. Shortly before Christmas President Trump agreed with China to reduce the tariff to 10% for the next 90 days to continue negotiations. While this will help ease the burden in the short term many suppliers and manufacturers have already adjusted pricing to account for the tariffs.
The main products affected in the tariffs are light fixtures, quartz counter tops, pre-finished wood floors, tile/porcelain floors, pre-finished cabinets, appliances, framing nails, and hardware. While not all flooring and counter tops come from China there are certain colors, and styles that will be more affected than others. Other products such as light fixtures and appliances are greatly affected.
The effect on the appliances is interesting as Whirlpool Corporation was facing stiff competition from Samsung and LG in the past year. They lobbied hard for protection from dumping of washers and dryers from overseas. Unfortunately for Whirlpool, the 20% steel and 10% aluminum tariff hit them hard. In addition, the Chinese tariff which they hoped would protect them ended up hurting them as many of the electronic components and pumps they use are imported from China and ended up costing them. Then Samsung purchased an old Caterpillar facility in the Carolina’s and converted it into an appliance factory to reduce some of the impact of the tariffs.
Appliances increased on 12/21/18 and the pricing is the new normal. At Belman Homes we pre-purchased a large quantity of our standard appliances and will have a small stock of them at the lower price to protect our clients for the short term.
Light fixtures are probably going to see the largest increase as almost all light fixtures are made in China. While most suppliers have built up inventory and purchased up as much product as they can afford, you are likely to already be paying the new prices on these fixtures if you are building or remodeling today. Homeowners need to keep in mind that there is usually a delay between the time that you agree to do a project and when product is selected so most of the older discounted inventory will be long gone.
Quartz countertops will also see price hikes. Fortunately, there are a few manufacturers in the USA such as Hanstone and Cambria, however they do have colors that only come from China so expect increases or lack of availability of some colors.
Housing affordability is a challenge throughout the country and any added costs are not helping keep affordability in check. We can only hope that this trade war is temporary, and a positive long-term solution is on the horizon. It is much like being sick, sometimes you have to take your medicine and while it might make you feel worse, in the long run you will be much better. A long-term fair-trade agreement with China can be worth it if the American Dream is protected along with it.
For more information and analysis of the tariffs please make sure to listen to our Home Building Hero podcast here!