Home renovation demand is soaring, and so are the costs to do it, thanks to a new round of tariffs on goods imported from China.
The latest round hits about $10 billion worth of Chinese products exclusive to homebuilding and remodeling, according to the National Association of Home Builders. The tariff starts at 10 percent, but could rise to 25 percent by the end of the year. That would be equivalent to a $2.5 billion tax increase on the industry.
Contractor Justin Sullivan manages home renovation projects in the Washington, D.C., area and says costs are going up so much so fast that he is doing something he has never done in his more than a decade in the remodeling business.
"Clients and contractors are having to set contracts with escalation clauses for projects that are being scheduled for six months from now, largely because we're not sure how far prices are going to go north," he said.
Sullivan said it is a quick education for new clients, who were already fighting to get projects scheduled, given the high demand and labor shortage. Higher home values have given homeowners more ready cash and more incentive to improve their investment. Now his clients have one more worry.
"It makes them want to do the project more quickly, trying to get it done. Then it's looking at ways to save money that will bring down the costs so the overall budget doesn't increase," he said. "It puts a little bit more pressure on everyone to try and be as diligent about the costs as possible."
Tariffs have already increased the costs of Canadian lumber as well as steel and aluminum imports. The new round adds everything from wall and floorboard to light fixtures, cabinets, heating and cooling equipment, and the tile for bathrooms and backsplashes.