Tariff Costs Take Toll on Home Improvement

Tariffs are in. Free trade is out — sort of.

Consequently, nearly everything worth buying is in disarray, including new appliances or a patio set. The goal to reinvigorate domestic manufacturing began to emerge as a result of the supply-chain bottlenecks brought about by the COVID-19 pandemic, as well as global tensions and security concerns, and is considered to be important for helping American workers in the face of a growing wealth gap. But so far, it has been mostly painful and confusing. In addition to generally higher prices, tariff-generated cost increases are impacting how and if Americans will improve/maintain their homes.

Home-improvement and remodeling projects have historically been reliable growth drivers in terms of creating jobs, material purchasing and generating an expanding tax base as well as helping to increase property values. Home improvements can run the gamut from relatively smaller projects like purchasing new kitchen appliances to larger ones like installing a swimming pool, driveway or outdoor kitchen. The early effects of tariffs, however, are dampening the local home-improvement party.

“Tariffs are definitely having an impact,” Paul D'Angelo of Water Mill Building Supply said. “People want estimates, but we can only hold prices for a few days. Unless the contractor can start the job within seven days, it’s very difficult to determine what the costs will be.”

Construction, like many other industries, has become globally sourced. China is a significant source of imported construction materials for the United States, accounting for 27 percent of all imports used in residential construction, including machinery, equipment, steel and aluminum. Chile, Canada and Mexico, in descending order, were the main copper exporters to the United States in 2024, according to Department of Commerce statistics. Chile’s copper sales were $6.2 billion, representing 35.7 percent of total U.S. copper imports.

Some analysts predict tariffs could cost Americans over $3,800 per year.

Consider lumber, one of the most basic building materials. The United States does not currently produce enough lumber to meet domestic demand, according to the National Association of Home Builders. It currently uses 50 billion board feet annually but only produces 35 billion board feet. While President Donald Trump has signed an executive order calling for a 25 percent increase in timber production from federal lands to help the nation move in the direction of self-sufficiency for lumber, due to logistical issues and the long time to ramp up sawmill production, it is projected to take months, if not years, before the market feels any impact. Tariffs on Canadian lumber shipments into the U.S. are expected to more than double by September, but that may change depending on trade negotiations. Until it does, for those shopping for lumber, it might be wise to prepare for price increases for the foreseeable future.

Americans understandably want to remodel and improve their homes. Issues like energy-efficiency, severe-weather preparedness and an overall shift to meet the needs of an aging population are some of the macro-factors behind many home-modification decisions, from installing entrance ramps to hurricane-force windows. Crumbling housing stock, combined with insufficient new home inventory, indicates that the remodeling market would be robust under normal circumstances. Personal satisfaction has historically been the main motivation behind many remodeling plans. Lower-cost projects that traditionally provide high levels of homeowner satisfaction and cost recovery include replacing front doors followed by closet renovations. On the higher end of the price scale, a new roof can enhance a home’s resale value as well as provide a much-needed upgrade in terms of energy efficiency and severe-weather protection. While it’s generally cheaper to install a new roof before you notice leaks in your attic, many projects may now be decided on a return-on-investment (ROI) basis emphasizing material availability and costs vs. a purely personal/aesthetic or vital-needs perspective.

“It’s complicated,” said Edwin Monroy of Hamptons Home Improvement Corp. in East Hampton. “We’re definitely noticing price increases, especially on cedar products. The better-quality shingles, which are mostly Canadian, have gone from $100 to about $140 per bundle.”

Monroy said many contractors are giving up some profit by absorbing a portion of the new higher material costs but there are still other overhead costs to be paid such as taxes and insurance. “The cost of material is becoming a larger part of each job,” he said.

If you need to finance your project, consider that the current average home equity loan rate for a borrower with good credit is around 8.36 percent.

“Costs are going up 100 percent across the board,” said Mike Burns of Burns Realty Development Corp. in Bridgehampton. “European cabinets have already increased by about 10 percent in price. We’re trying not to pass the additional costs to the customer, but profits are shrinking. We do not anticipate any layoffs but are adjusting.”

Burns noted that the market never fully recovered from COVID-generated price increases, underscoring the theory that the local economy is at risk from the simultaneous dynamics of lower growth and higher inflation. “People are still renovating, upgrading and buying what they can afford,” he said. “It’s volatile.”

There is widespread concern that tariffs will sharply raise prices on goods at a time when many were already feeling squeezed due to the lingering impacts of the inflationary spike from a few years ago. Uncertainty will likely persist and headlines will continue to drive consumer and business behavior. While the consumer generally remains relatively healthy, amid a downturn, more will be unable to make bill, loan and credit card payments. As of this writing, the consensus is that the Federal Reserve will leave interest rates unchanged barring a highly negative economic event.

Frank Sorrentino, the chairman and CEO of ConnectOne Bank, noted, “Although there is an increasing industry-wide focus on the impact of potential tariff policy on borrower health in various loan segments, our direct exposure to import/export-dependent segments is very limited.”

Nationally, nonresidential construction spending fell 0.5 percent in March to a seasonally adjusted annual rate of $1.25 trillion, retreating from February’s record-setting high, according to an Associated Builders and Contractors analysis of U.S. Census Bureau data. Construction prices increased at a rapid pace for the third consecutive month in March and have now risen nearly 10 percent through the first quarter of 2025.

Not everyone in the building business is complaining about the effects of tariffs.

“I’m staying in this market because I believe what he’s [President Donald Trump] doing over the long haul will benefit the country in a number of ways,” former Home Depot CEO Robert Nardelli said in a statement. “Not only balancing the tariffs, but he’s also focused on balancing the dollars of trade, which is also important for this economy going forward.”

No one likes uncertainty, especially when planning a home remodeling project.

“Thankfully,” D'Angelo said, “customers have generally been understanding.”