Starting Tuesday, new tariffs take effect on timber, lumber and certain wood products. U.S. officials say the tariffs aim to strengthen domestic manufacturing, but higher lumber costs could trickle down to new home prices.

Donald Trump has signed an order to impose tariffs imports into the U.S. from countries including China, Mexico and Canada.

Global Tariffs

The United States has implemented new tariffs on timber, lumber, and certain wood products, including a 10 percent duty on softwood lumber and a 25 percent tariff on upholstered wood furniture, kitchen cabinets, and vanities. These rates are set to increase further, with some tariffs doubling or rising to 30 percent. Countries with trade agreements with the U.S., such as the U.K., Japan, and the E.U., will face lower tariff rates.

Officials state that the tariffs are intended to strengthen domestic manufacturing, but higher lumber costs may lead to increased home prices and remodeling expenses. Analysts warn that these tariffs could slow economic growth and potentially contribute to inflation, particularly if additional tariffs are imposed. The ongoing trade tensions with China and market reactions highlight the uncertainty surrounding future pricing and economic conditions.

How new tariffs could impact home remodeling

And this morning's Money Watch, trade tensions with China are building while the U.S. rolls out new tariffs. Money Watch correspondent Kelly O'Grady is here with what you need to know. Kelly, good morning. Yeah. So, good morning. I just want to run through these tariffs to start off with. New tariffs are going to be slapped on timber, lumber, and certain wood products. They'll include a 10 percent duty on softwood lumber, as well as a 25 percent tariff on upholstered wood and furniture, kitchen cabinets, and vanities. Starting January 1st, though, those rates increase. So, upholstered wood furniture may tick up to 30 percent. Kitchen cabinets and vanities may double to 50 percent. Some good news, though, for you. If you're buying from certain countries that agree to trade deals with the U.S., you'll get a reprieve. So, for example, the U.K. tariff, that's capped at 10 percent. Japan and the E.U. are at 15 percent. U.S. officials, they say, the tariffs aim to strengthen domestic manufacturing, but these higher lumber costs, they could trickle down to new home prices. And then, of course, anyone looking to furnish their homes could feel the impact, too, especially if you're looking for those cheaper options from China and India. All right, so I was texting with a former colleague at Alliance Bernstein, and they estimate that GDP is going to slow to a near-stall scenario based on these tariffs. The president has threatened these additional tariffs on China. He's been talking about this for a long time. Why are these comments now sparking such a reaction? So, I do want to level set, because China was the one that reignited the trade war by putting those export restrictions on rare earth minerals. But you're seeing this visceral market reaction for two reasons. We haven't seen the runaway inflation yet from that 30 percent existing tariff on China. Now that he's threatened an additional 100 percent tariff, that's going to be really hard for businesses to eat. And so the Federal Reserve might look at the situation and go, hey, we can't do those interest rate cuts. And you know investors want interest rate cuts. We've been talking about that. The second thing is, this harkens back to the first Trump administration, where you saw that trade war with China go for over two years. So I think investors have a little PTSD, think that this might last longer than expected. However, the president on Sunday, he said, look, don't worry about China. You did see the market rebound some yesterday. Vlad, I think the takeaway here is Beijing, that relationship, it's really tenuous. Any cracks will send the markets roiling. Still worried about that inflation number, though, which could also have these repercussions based on these tariffs. Kelly O'Grady, always great to have you. Thank you very much.

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How new tariffs could impact home remodeling

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