Trump Tariffs On Canada, China And Mexico Go Into Effect Saturday

President Donald Trump will enact tariffs on goods imported from three major U.S. trade partners, multiple news outlets reported Friday. The plan goes into effect Saturday, the White House confirmed, with 25% tariffs on Canada and Mexico, along with 10% tariffs on China.

According to reporting from The New York Times, these three countries are responsible for more than one-third of all goods and services imported or exported from the U.S., and they support tens of millions of American jobs. The Canadian, Chinese and Mexican governments have promised to answer with tariffs of their own.

“No one — on either side of the border — wants to see American tariffs on Canadian goods,” Canadian Prime Minister Justin Trudeau said Friday on social media platform X. “If the United States moves ahead, Canada’s ready with a forceful and immediate response.”

HousingWire Lead Analyst Logan Mohtashami wrote Friday that he does not suspect that tariffs will become a broader policy strategy for the Trump administration.

“I don’t believe we will see universal tariffs in place for the Trump term; this is all about negotiating a deal with other countries,” Mohtashami wrote. “Can we possibly see tariffs put into place to strong-arm countries into deals? Yes. However, this is all a short-term ploy to get better deals. Trump doesn’t want people to think he’s bluffing, so he may follow through with his threat, but it would only be a short-term event.”

Tariff proposals have been part of the Trump agenda for some time and will impact the U.S. homebuilding industry, particularly through imports of Canadian softwood lumber. The National Association of Home Builders (NAHB) swiftly responded to the announced tariffs on Friday in a letter to the White House.

“Bringing down the cost of housing will require a coordinated effort to remove obstacles to construction, be they regulatory, labor or supply-chain related,” NAHB Chairman Carl Harris said in the letter. “NAHB stands ready to work with you to accomplish these goals. However, we have serious concerns that proposed 25% tariffs on Canada and Mexico will have the opposite effect, by slowing down the domestic residential construction industry.”

The trade group also reported that inputs for residential construction have seen their prices rise by more than 30% since the start of 2021. Canada and Mexico account for about 25% of building materials imported to the U.S.

Shortly after Trump’s election in November, his proposals included across-the-board tariffs of 10% to 20%, with additional tariffs of 60% to 100% for China. A forecast from Pantheon Macroeconomics estimated that a 10% universal tariff would raise inflation by 0.8% percentage points in 2025. And the Tax Foundation estimated that a 20% tariff would raise taxes on U.S. households by an average of $2,045 in 2025.

The tariffs come at a time when the housing and mortgage industries are trying to spur more Americans to buy and sell homes. The Federal Reserve this week ended a streak of cuts to benchmark interest rates, holding them steady at a range of 4.25% to 4.5%.

“The Fed’s pause on rate cuts confirms what Treasury yields have been telling us — inflation risks are likely to keep mortgage rates high in the near term,“ Eric Orenstein, senior director at Fitch Ratings, said in the wake of the Fed’s decision.

Fed Chair Jerome Powell said he’d had “no contact” with Trump about the president’s clear desire to lower interest rates. But he also told reporters that the central bank’s forecasting efforts had potential tariffs in mind, as well as any policies related to immigration.

“I think we need to let those policies be articulated before we can even begin to make a plausible assessment of what their implications for the economy will be,“ Powell said Wednesday. “And as we always say, this is no different than any other set of policy changes at the beginning of an administration. We’ll patiently watch and kind of not be in a hurry to get to a place of understanding what our policy response should be until we see how it plays out.”

In an earnings call this week, Hilla Sferruzza, executive vice president and chief financial officer of Meritage Homes — one of the nation’s largest homebuilders — said that his company did not yet have clarity on the tariff proposal.

“But as an industry, we have experienced extreme supply chain constraints a couple of years back and are routinely dealt with labor shortages, especially over the past decade,” Sferruzza said. “For Meritage, our all-spec strategy has and will continue to allow us to pivot and offer a substitute if product availability or cost issues arise.

“We have been expanding our sourcing channels over the past several years, particularly since COVID, so we remain nimble and ready to adjust to any potential international trade implications.”

The Times reported that North American automakers also oppose the tariffs. Linda Hasenfratz, executive chairwoman of Canadian auto parts maker Linamar, told the outlet that the additional 25% costs could shut down auto production across the continent within a week.

“Nobody can absorb this kind of cost, not the automakers, not the suppliers, not consumers,” Hasenfratz told the Times. “Demand will collapse, and vehicle production will grind to a halt, putting millions of workers out of work, the vast majority of which are in the U.S.”

Editor’s note: This is a developing story and will be updated as more information becomes available.