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Nolan Gray, policy director of the Center for Market Urbanism, says steel and lumber tariffs couldn't have come at a worse time for housing's affordability crisis. The tariffs, combined with new tariffs on Canadian lumber late last year and harsher enforcement on the migrant workers from Mexico and Central America, could mean higher rents and more expensive housing in the years to come.

Gray explains:

Nearly half of all U.S. steel imports go into construction, with a large share of that steel going into multifamily housing. While wood frame construction is increasingly common for apartment buildings up to five stories, the taller structures that are needed in white-hot housing markets such as San Francisco, New York, and Austin depend entirely on access to steel. According to a study released by the Trade Partnership earlier this month, the proposed steel tariffs could lead to 28,000 lost jobs in the construction industry. That’s a lot of housing that won’t be built, and affordable projects that already operate on tight margins will be the first to be cut. While exemptions from the tariffs might offer hope, the price volatility in the near term could still scuttle many large projects, where price certainty is crucial for investors.

This new tariff follows on the heels of other recent initiatives that hurt new housing construction. Last April, the Trump administration placed a 20.83 percent tariff on Canadian lumber, to the benefit of politically valuable voters in Maine. Within the construction industry, these imports commonly turn into framing lumber, which is used to build single-family homes and small multifamily buildings. As Jen Skerritt pointed out earlier this month in Bloomberg Businessweek, Canada is the major source of this framing lumber, and the rising prices that result from the tariffs mean that builders are already raising prices and looking for ways to cut costs. One alternative is to switch to other materials such as steel or concrete, but this month’s tariffs dash the former alternative.

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