Trump screwing the little guy. Again.

Builders Stockpile Lumber, Swap Out Materials to Work Around Tariffs - WSJ

When President Trump threatened new tariffs on Mexico, Canada and China at the beginning of February, Steve Martinez flew into action. 

The Idaho-based general contractor spent hundreds of thousands of dollars on materials like lumber, windows, cabinetry and steel to stockpile them before the tariffs hit. He now has nearly a third more of these supplies compared with last year. And he is renting out shop yards to stockpile these goods, which his suppliers often import from Canada, Mexico and China and could rise in price under tariffs. 

Since his lenders wouldn’t finance these purchases, he is paying out of pocket and using cash that he had earmarked for hiring more staff or funding new projects. But at least he felt prepared when Trump imposed tariffs last week. 

Then after the president abruptly walked them back, Martinez was left with an upended business plan, less cash and feeling confused about what to do next.

“I can’t keep ping ponging back and forth,” Martinez said.

The construction industry is going through a critical period. New housing is in extreme demand to address a prolonged housing shortage, which is more than seven million units by some estimates. New construction is vital to solving one of the country’s deepest economic challenges. 

Some bigger publicly traded companies say they aren’t that worried. They think they can use their size and leverage to negotiate more aggressively with suppliers, or even outright refuse price increases, analysts say.

“We have plenty of slack in the industry to absorb these kinds of cost increases,” said Tri Pointe Homes Chief Executive Doug Bauer. 

But the tariff threat is sending many smaller builders and contractors scrambling to protect themselves.

More than 70% of imported softwood lumber and nearly one-third of the imported gypsum used for drywall—both essential to residential construction—come from Canada and Mexico, respectively, according to the National Association of Home Builders. If Trump follows through with his tariff threats, the cost of building a single-family home will increase between $7,500 to $10,000, the NAHB estimates based on anecdotal reporting.