Trump administration’s tariffs ‘will undoubtedly’ affect Will County housing market, builders group says

The tariffs now in place and those that still are being studied by the Trump administration for possible implementation are creating some real uncertainty on the Will County economy.

The 25% tariffs on all aluminum and steel imported to the U.S. are expected to affect large manufacturing as well as small businesses.

Cheryl Lee, president of the Northern Illinois Home Builders Association and president of CL Design-Build Inc. – a custom homebuilder in the western suburbs, including Plainfield – said the expanded tariffs “will undoubtedly impact both consumers and the homebuilding industry in our region” when housing affordability is already a critical issue.

The ongoing housing affordability crisis “is making it increasingly difficult for families across all income levels to achieve homeownership, straining local economies and worsening the shortage of quality, attainable housing,” Lee said. “The residential construction industry has already faced numerous price increases on essential materials, directly driving up the cost of housing,” she said.

Lee said steel prices spiked significantly in 2018 when tariffs were imposed and in 2021 after the pandemic, and they likely will increase again with these recent tariffs.

“The reality is that many U.S. suppliers aren’t prepared to meet demand and, historically, their prices have not aligned with the current market.”

—  Cheryl Lee, president of Northern Illinois Home Builders Association

As essential materials in residential construction, steel and aluminum are used in concrete reinforcement, structural steel, fasteners to garage doors, windows, exterior doors, roof and siding flashing, electrical conduit and materials, plumbing materials, ductwork, appliances, faucets, light and fixtures, Lee said.

“Small and mid-sized builders, who already operate on tight margins, will likely be hit the hardest, facing project delays, shifts in material sourcing and, ultimately, lost profits,” Lee said.

The extended tariffs also will affect related trades and suppliers, including heating, ventilation and air conditioning contractors and appliance vendors, many of whom are small businesses, Lee said.

“While businesses may try to adjust by sourcing domestic alternatives, the reality is that many U.S. suppliers aren’t prepared to meet demand and, historically, their prices have not aligned with the current market,” Lee said. “As a result, supply chain disruptions and price volatility create even more uncertainty across the industry.”

Cost of steel

Mike Testa of family-owned Testa Steel Constructors Inc. in Channahon said, “One word comes up in every conversation I have had about the tariff situation as it relates to steel prices, and that word is uncertainty.”

Testa does fabrication and installation of structural and miscellaneous steel, as well as the installation of pre-engineered metal buildings, among other work.

The uncertainty of the market, Testa said, is driven by several factors.

The first factor is many large steel mills are located in Canada. Secondly, carbon steel prices in 2024 dropped dramatically from $1,000 per ton to $600 per ton by June due to reduced post-COVID demand, Testa said.

But steel prices are creeping back up, with price increases in tube steel and sheet/plate steel, more than $60 per ton and more than $80 per ton, respectively, Testa said.

“Demand remains low, but supply is also currently low, and there are some availability issues that may cause concerns in the near future,” Testa said. “We have advised customers to get orders placed in order to lock in pricing for projects that are moving.”

Nevertheless, availability of certain products may become an issue. Many mills produce only “certain products at certain times,” so buyers may find inventory of certain products depleted due to 2024’s low demand, Testa said.

“Steel mills are historically greedy and take advantage of situations like this. They send out price-increase notifications that affect any order not already on the books,” Testa said. “If you have an order, it typically must be picked up in 30 days or it, too, will be subject to increase as well.”

“We have advised customers to get orders placed in order to lock in pricing for projects that are moving.”

—  Mike Testa, Testa Steel Constructors Inc. in Channahon

But because President Donald Trump used the tariff strategy used during his last administration, some increased costs were expected and built into current pricing, Testa said.

“On that occasion, it did not last very long at all,” he said. “But this time nobody cares to predict how long it may last.”

With steel being used in numerous products, “the potential tariffs on both Mexican and Canadian steel will ripple through the domestic market quickly, as pricing moves quickly, not unlike what we see in the gasoline market,” Testa said.

Will that affect the economy? Possibly, depending on “how long the current round of tariffs last and if additional tariffs are put in place,” Testa said.

The tariffs most likely won’t affect construction projects since “price volatility is constantly affecting one area or another of the construction industry all the time,” Testa said. “In my opinion the bigger impact will be on the economy as a whole as higher steel costs are passed along to consumers who are already battered by high prices elsewhere.”