Manufacturers, Builders Say China Tariffs Driving Up Housing Costs
The Housing Affordability Coalition, a new group inspired by the invitation to submit information to the government about the economic impact of Section 301 tariffs on Chinese imports, is arguing that higher tariffs on such items as vinyl flooring, cabinets, light fixtures, windows and the like is contributing to higher costs for new houses.
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The coalition held a webinar on the topic hosted by Sandler Travis on Sept. 21.
Douglas Holtz-Eakin, president of the American Action Forum, said that as a result of the tariffs, the cost of vinyl tile imports is up 22%, light fixtures are up 15%, ceramic tile is up almost 9% and windows are up nearly 4%. Some of these increases are due to inputs for the finished product, not a Chinese import of windows, for instance.
Harlan Stone, CEO of HMTX industries, a $900 million global luxury vinyl tile manufacturer, said he is trying to expand domestic production of LVT, but there are 25% tariffs on the machines used to make the product, and China is the only source for that equipment. Despite the name, Luxury Vinyl Tile is a lower-cost flooring option, substituting for more expensive hardwood or stone it can mimic.
He said he isn't trying to produce more flooring outside China because of the tariffs; it's more because of supply chain snafus.
"I employ well over 150 in America. I’m going to employ another 120 people at this factory," he said. "I could have built three factories for the cost it took me to build one," he said, blaming the tariffs on the machines.
He said even with this new factory and two other companies adding domestic production, U.S. production won't even cover 5% of U.S. demand for LVT.
Jacob Carter, director of government affairs at the National Lumber and Building Materials Association and Window and Door Manufacturers Association, said the tariffs on window inputs have not helped get China to negotiate.
"These are a direct tax on my manufacturers," he said.
Life Saver Pool Fence, a family-owned company, has paid 7.5% on most of its inputs and 25% on some items, owner Eric Lupton said. He said the tariffs have gone deep into six-figures, and said that was half the net profit.
Although some tariff critics point to the antidumping and countervailing duties on Canadian softwood lumber as the biggest source of cost inflation in homebuilding, this webinar did not talk about that issue. When asked by International Trade Today why the China tariffs were the only focus, Holtz-Eakin said, "I started out talking about the China tariffs not because they are the entire problem," he said, but because they can be unilaterally rolled back by the Biden administration, and because the Office of the U.S. Trade Representative is currently evaluating whether they should be renewed.
"They’re not the entire opportunity either," he said, but he said he doesn't think the softwood lumber dispute can be resolved quickly, "and that’s why we didn’t focus on it that much."