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Trump's tariffs made California's housing crisis worse: A 'perfect storm of the wrong kind'

Kate Irby, McClatchy Washington Bureau on

Published in Home and Consumer News

WASHINGTON -- President Donald Trump's tariffs have created the "perfect storm" at the wrong moment for the housing industry, California builders say.

The California Building Industry Association estimates tariffs have driven up the cost of an average-size new home by $20,000 to $30,000.

That comes from tariffs on appliances, certain counter tops and other miscellaneous items that "at the end of the day, really add up," according to Dennis Fitzpatrick, owner of Fitzpatrick Homes in Modesto.

The industry was already struggling, particularly in California, because of increased costs. They face rising fees from local governments and a shortage of space and labor to build. The added cost and uncertainty of tariffs have pushed it that much further, builders say.

"This created the perfect storm of the wrong kind," said David Logan, director of Tax and Trade Policy at the National Association of Home Builders. "All the stars aligned for the worst outcome."

The tariffs against China increased from 10% to 25% in May on about 500 items involved in housing, such as appliances, nails, lighting, laminate, tile, cabinets and other common finishes in housing made from aluminum, steel and lumber.

 

The home builders association estimates the tariffs will ultimately cost home buyers $2.5 billion per year nationwide. Facing those costs, builders such as Fitzpatrick have to find other materials to use in homes or pass the charges directly on to their customers -- those looking to build or renovate their homes.

Trump has billed the tariffs as necessary to fight unfair actions by China, including intellectual property theft. He consistently says that China is paying the tariffs, though experts agree that consumers are the ones who end up paying for tariffs.

While the tariffs are not the most cost prohibitive part of building a home, particularly in California, they can price some families out of the market.

Dan Dunmoyer, president of the California Building Industry Association, said increasing the cost of $500,000 home in the state by even $10,000 would price out thousands of families. The median price of a home in California in June was $611,000 according to state data.

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