Import Use by Building Product Type
Top 10 Import Reliant Products in New Residential Construction
Import use varies significantly depending on the type of building product. As shown above, these are the ten most import-dependent products used in new residential construction. They are defined by the North American Industry Classification System (NAICS). This data gives us a clear understanding of which products rely heavily on imports.
For instance, certain products play a crucial role in the construction process and have a high import content. Understanding these details is essential for the housing industry and policymakers alike.
Countries Importing Residential Construction Products
The U.S. Census Bureau reports data on international trade of goods by NAICS definitions. This allows us to identify the nations responsible for importing products used in residential construction into the U.S. Using the commodities in residential construction, a significant share comes from China, accounting for 27%. Mexico is the second most important nation with around 11%, followed by Canada at 8%. The countries with the 10 highest shares and the remaining 27% from countries outside the top 10 are clearly depicted below.
These trade patterns have a significant impact on the domestic housing market and the overall economy.
Tariff Impact
President Trump's Tariff Plan
During the election campaign, President Trump promised to enact a tariff plan ranging from 10% to 20% on imported goods, with a 60% tariff on imports from China. A tariff is essentially a tax on an imported good, and the importer bears the additional cost. For example, if a business in the United States needed to purchase a $100 worth of screws from China and a 60% tariff was imposed, the business would have to pay an additional $60 to the U.S. Government. The exporter in China would still receive the $100 and not pay the added tariff costs.
Without specific details about these tariff proposals, it is challenging to accurately estimate their impact. However, based on our best estimates, a 10% tariff on all imports with a 60% tariff on imports directly from China would lead to a $3.2 billion increase in the cost of imported building materials used in residential construction. By product, household appliances, where 54% of imports come from China, would see a $670 million increase in cost.
Impact on Specific Imports
From Canada, the U.S. imports a substantial amount of wood-related products. In 2023, 70% of sawmill and wood product imports came from Canada. Many of these wood products are already subject to a 14.5% tariff. The total imports of sawmill and wood products from Canada in 2023 was $5.8 billion. Nonferrous metals were the highest-valued import from Canada in 2023, totaling $17.6 billion.
Turning to Mexico, 71% of lime and gypsum products imported in 2023 originated from Mexico. Although this share is high, the total value of imports in 2023 was only $456 million. Computer equipment was the highest-valued import from Mexico in 2023, with imports from Mexico making up 23% of total imports of computer equipment.
Adjusting Data to 2023
To adjust this data to 2023, we inflate the products used in single-family and multifamily residential structures by the respective increases in residential fixed investment. This inflation factor reflects the change in the dollar value of residential construction output. Imports are also adjusted by the corresponding change in the dollar value of goods imports from 2017 to 2023.
This adjustment helps us understand the current economic landscape and the role of imports in residential construction.
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