Building Materials and Tariff Impacts – July 2025

Rising Material Costs Challenge Contractors

Building material costs continue to strain contractors, driving up project budgets and affecting housing affordability. For instance, lumber prices have recently stabilized but remain higher than last year due to ongoing supply chain disruptions and limited domestic production. Consequently, these elevated costs, combined with pressures on other materials, create significant challenges for contractors managing construction projects.

Tariff Delays Provide Temporary Relief

Meanwhile, tariff developments significantly impact the industry. The U.S. Department of Commerce currently imposes 14.5% tariffs on Canadian softwood lumber, a key source of U.S. lumber imports. These tariffs are set to more than double to 34.5% later this year, potentially exceeding 50% when combined with proposed 25% tariffs on Canadian goods. Fortunately, a recent extension of the tariff deadline under the United States-Mexico-Canada Agreement (USMCA) delays these increases. As a result, this pause offers contractors a window to plan for potential cost hikes in lumber and other imported materials like gypsum.

Domestic Lumber Supply Faces Constraints

Additionally, domestic lumber production struggles to meet demand, tightening supplies. U.S. sawmills currently operate below capacity, and declining imports from Canada further strain availability. To address this, recent efforts, including an executive order to boost domestic timber production, aim to increase output. However, scaling up will require time and investment. Therefore, contractors can mitigate these supply challenges by exploring long-term material contracts to lock in stable pricing.

Broader Material Market Pressures Persist

Beyond lumber, materials like steel, aluminum, and gypsum also face pressures from global trade policies and supply chain disruptions. Since a portion of goods used in residential construction comes from imports, tariffs directly drive up costs for builders and homebuyers. To counter this, contractors should adopt efficient practices, such as minimizing waste and exploring sustainable options, while partnering with suppliers to secure cost-effective solutions.

Valley Ace Hardware’s Commitment to Contractors

At Valley Ace Hardware, we actively support contractors through these challenging market conditions. Specifically, we collaborate closely with our suppliers to secure competitive pricing and maintain a steady inventory of essential building materials. By strengthening these partnerships, we ensure your projects stay on track with reliable stock and pricing that supports your bottom line. Reach out to our team to discuss your needs and discover how we can help you navigate these market dynamics.

Housing Market Faces Ongoing Challenges

Finally, the housing market reflects these material cost pressures, with private residential construction spending declining for several months due to rising costs and high mortgage rates. Although the tariff delay provides temporary relief, ongoing trade policy uncertainty complicates project planning. To stay ahead, contractors should budget conservatively, use fixed-price contracts, and leverage industry updates to navigate these market shifts effectively.

Source: National Association of Home Builders (NAHB), July 2025.