According to industry representatives, President Donald Trump’s plan to slap 25% tariffs on items imported from Canada and Mexico might severely restrict Oregon’s already dwindling homebuilding and other construction activities.
An additional 10% duty on Chinese goods still went into effect this week, but Canada and Mexico made last-minute agreements to postpone penalties by a month. However, Preston Korst, director of strategy and government affairs for the Home Building Association of Greater Portland, stated that further tariffs would just exacerbate Oregon’s housing problem, given the threat currently looming over North American commerce.
According to him, the most severe price increases will be felt by builders in softwood lumber from Canada, gypsum used for drywall, electric transformers, and kitchen appliances, all of which have already seen price increases in recent years.
According to Korst, the mere possibility of tariffs creates uncertainty in a sector that doesn’t need them. According to him, it’s already challenging to draw in the kind of capital required to finance the building of new homes because of investor apprehension.
“Adding tariffs to that equation can only further disadvantage Portland’s housing production goals,” Korst said.
This comes after economists briefed Oregon lawmakers last month on the poor housing production situation in Portland, where the fewest apartments are being built since at least 2011.
Economists from ECONorthwest informed the House Committee on Housing and Homelessness on January 22 that Oregon is the second-least productive state in the US in terms of housing construction.
The company’s president and CEO, Lorelei Juntunen, said the committee that things had gotten worse over the past ten years.
Carl Riccadonna, Oregon’s senior economist, told the committee the next week that the state must build 29,500 homes annually to meet the demands of its expanding population. Oregon allowed roughly 14,000 units last year.
Given current production rates, Riccadonna told lawmakers, “We’re in a very bad position,” emphasizing the need for constant supply for the state.
Homebuilders’ capacity to increase supply will be hampered by a trade war that clogs global supply chains, according to industry lobbyist Korst.
The last thing we need right now is increased material costs from tariffs, he said, given the challenges local homebuilders are already facing, such as a paucity of land, high borrowing rates, delays in permits, infrastructure requirements, and a lack of workers.
Some people in the commercial building industry also felt same frustration.
Tariffs, according to Mike Salsgiver, CEO of the Associated General Contractors Oregon-Columbia Chapter, cause uncertainty, which hurts developers, contractors, and investors.
According to Salsgiver, tariffs are just bad for the building industry, but he sees them as a solution to a problem. What issue is being attempted to be resolved is still unknown to us.
–Jonathan Bach covers real estate and housing. You can contact him by phone at 503-221-4303 or by email at [email protected].
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