‘Enormous fear’: Housing industry braces for ‘severe blow’ under Trump plan

Already buckling by the pressure of soaring mortgage rates and a reduction in supply, the U.S. housing industry is even more on edge as President Donald Trump threatens steep new tariffs on lumber.

And the fallout is already being felt.

That’s according to a new report in Politico, which detailed how a 25% lumber tariff – which Trump said Wednesday he is considering – coupled with mass layoffs at housing agencies across the country “could deal a severe blow to the industry.”

“The moves could increase the cost of construction and slow financing for affordable developments — contravening a White House executive order vowing to ‘drastically lower the cost of housing’ and expand supply,” Politico reported Thursday.

And the backlash has already begun.

“Home builder sentiment fell sharply in February on concern over tariffs and high mortgage rates,” the report said, adding that while housing starts “were weaker than expected in January,” that was partly due to cold weather.

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“The president ran on bringing down the cost of housing,” Ken Wingert, chief advocacy officer at the National Association of Home Builders, told Politico. “Increasing the cost of construction inputs doesn’t accomplish that goal, and we will continue to relay that to folks in the administration and on the Hill.”

Meanwhile, cuts to the Department of Housing and Urban Development led by Elon Musk’s Department of Government Efficiency “including possible reductions at related agencies like the Federal Housing Administration and Ginnie Mae — could hinder financing of new affordable apartment units” and delay new projects, Politico noted.

While White House allies say the presidential trade policy would boost the housing market, some industry leaders weren’t so sure.

“There’s enormous fear in the housing system, among lenders, among advocacy groups, and the threat of retaliation is palpable,” according to an industry leader who requested anonymity out of fear of a backlash from the administration.