New tariffs on Canadian softwood lumber announced by the Trump Administration on Monday are nothing more than "a papercut," said RBC Capital Markets homebuilding and building products analyst Bob Wetenhall.
"It's not going to affect the real estate market, [and] it's not going to impact housing prices," Wetenhall said during CNBC's "Power Lunch" on Tuesday.
Yet, the iShares U.S. Home Construction ETF (ITB) dropped nearly 1 percent on Tuesday following the announcement as investors worried about an increase in costs.
Wetenhall said, "The bigger, more important trend that is going to drive stocks, equity valuations [and] shareholder returns is the strength of the consumer and the health of the housing market, which is intact."
He added that as long as demand persists for new homes and interest rates remain low, he sees nothing derailing the space in terms of profitability and profit margins.
"Everyone knew [the tariffs] were coming; the 25 percent number is less than what people were anticipating. People were saying this could be 45-50 percent, so this is actually a step-down," Wetenhall said.
When asked about the effect on other products such as doors or cabinets, where lumber may be a larger share of costs, Wetenhall said: "We see minimal input cost inflation across the landscape."
Watch: Ross on lumber tariffs