Tariffs at the Toolbench: Trade Pressures in Building Materials

A Shifting Economic Backdrop

The U.S. build­ing mate­ri­als and home improve­ment indus­tries are fac­ing dis­rup­tion unlike any­thing seen in decades. The aver­age effec­tive U.S. tar­iff rate has climbed to 18.6% in 2025 — the high­est since 1933. The result: sup­pli­ers, dis­trib­u­tors, and retail­ers are fac­ing high­er costs, strained sup­ply chains, and shift­ing mar­ket behavior.

For house­holds, the effects are imme­di­ate. Accord­ing to Yale’s Bud­get Lab, tar­iffs are expect­ed to cost the aver­age fam­i­ly about $2,200 this year while shrink­ing the U.S. econ­o­my by rough­ly 0.4% annu­al­ly, or $125 bil­lion. (The Bud­get Lab) Ernie Tedeschi, Direc­tor of Eco­nom­ics at Yale’s Bud­get Lab, has not­ed that while tar­iffs were orig­i­nal­ly intend­ed to reduce trade deficits, the only durable way that might occur is by slow­ing U.S. eco­nom­ic growth and invest­ment. (Bloomberg) Yet not all sec­tors are suf­fer­ing equal­ly: while con­struc­tion and agri­cul­ture are con­tract­ing, U.S. man­u­fac­tur­ing out­put is pro­ject­ed to rise 2.1% over­all, with non-advanced durable goods — includ­ing many build­ing mate­ri­als — up near­ly 4%.(The Bud­get Lab).

Tariffs on the Ground: Real Impacts on Materials and Retail

Beneath the macro trends, the rip­ple effects of tar­iffs are vis­i­ble in the prod­ucts and cat­e­gories that keep projects mov­ing. Lum­ber, where 85% of U.S. soft­wood imports come from Cana­da, is par­tic­u­lar­ly vul­ner­a­ble. New tar­iff hikes could add $7,500 – $10,000 to the cost of a sin­gle-fam­i­ly home. (Fin­MKT) Mean­while, steel and alu­minum – based prod­ucts are absorb­ing 10 – 25% cost increas­es, and adhe­sives and paints, which are reliant on import­ed chem­i­cal inputs are show­ing ris­ing volatil­i­ty. (S&P Glob­al Mar­ket Intel­li­gence)(BHG)

A recent SKU-lev­el analy­sis shows 63% of pow­er tool SKUs increased in price between April and May 2025, near­ly dou­ble the share from the same peri­od last year. At the retail­er lev­el, 58% of Home Depot’s pow­er tool SKUs saw increas­es, com­pared with near­ly 70% at Lowe’s. Despite this, more than half still post­ed year-over-year sales growth — a sign that pric­ing pow­er in cer­tain cat­e­gories remains strong.

Chart 1: Month­ly price increas­es across pow­er tool SKUs (Jan. 2024-June 2025)

Chart 2: SKU price increas­es at Home Depot vs. Lowe’s.

How the Market Is Adapting

Retail­ers are del­i­cate­ly walk­ing a tightrope between ris­ing costs and prod­uct pric­ing. Home Depot orig­i­nal­ly com­mit­ted to avoid­ing broad price hikes, instead using tar­get­ed adjust­ments and prod­uct sub­sti­tu­tions. After a weak Q2, their strat­e­gy has shift­ed to include ​“mod­est price move­ment in some cat­e­gories.” (CNN) Lowe’s has been less defin­i­tive, sig­nal­ing that some tar­iffs will inevitably have to flow through to consumers. 

Major sup­pli­ers have also imple­ment­ed price increas­es, adding fur­ther pres­sure down­stream.(NPR) Con­sumers are adapt­ing too: sur­veys show 50% of home­own­ers plan to buy less often, 40% are turn­ing to low­er-priced brands, and half are con­sid­er­ing sec­ond­hand or local­ly sourced alter­na­tives.(BHG)

Con­trac­tors, caught between sup­pli­ers and con­sumers, are nav­i­gat­ing as best they can. Many are exper­i­ment­ing with mate­ri­als like engi­neered wood and U.S.-sourced com­pos­ites as a means to avoid pric­ing hikes and sup­ply chain delays. Recent research from the Home Improve­ment Research Insti­tute under­scores this uncer­tain­ty: more than a third of con­trac­tors (36%) now cite tar­iffs as the most dis­rup­tive exter­nal risk they face in 2025, out­pac­ing even inter­est rates and immi­gra­tion policy.

Quick Takeaways for Teams

• Tar­iffs are reshap­ing the econ­o­my. U.S. tar­iffs now aver­age 18.6% which is the high­est since 1933. GDP fell 0.5% in Q1, rebound­ed 3.3% in Q2, and is fore­cast to slow to ~1% in Q3. Man­u­fac­tur­ing remains up +2.1% in 2025.
  
• Mate­r­i­al costs are still spik­ing. Lum­ber tar­iffs alone could add up to $10K to a new home, while steel, alu­minum, and cop­per face 10 – 25% increases.
  
• Hid­den SKU-lev­el pat­terns. 63% of pow­er tool SKUs rose in price this spring, near­ly dou­ble last year’s pace, yet more than half still post­ed sales growth.
• Con­trac­tors flag tar­iffs as top risk: 36% rank tar­iffs as their most dis­rup­tive exter­nal fac­tor in 2025.

Why Data Matters More Than Ever

The macro head­lines on ris­ing infla­tion, high­er project costs, and a slow­ing hous­ing mar­ket,(Fin­MKT) only tell part of the sto­ry. The real advan­tage comes from see­ing how tar­iffs affect cat­e­gories, SKUs, and retail part­ners at a region­al and retail­er lev­el. SKU-lev­el intel­li­gence track­ing hun­dreds of mil­lions of inven­to­ry records dai­ly helps iden­ti­fy where tar­iffs are reshap­ing assort­ments, expos­ing cost vul­ner­a­bil­i­ties, and influ­enc­ing pric­ing power.

This lev­el of clar­i­ty helps man­u­fac­tur­ers, dis­trib­u­tors, and retail­ers make informed, proac­tive moves — from adjust­ing pric­ing mod­els, to plan­ning for stock fluc­tu­a­tions and reshap­ing assort­ments in cat­e­gories like roof­ing, adhe­sives, and pow­er tools.

What’s Next: From Insight to Action

The com­ing year will be piv­otal. With the future of tar­iffs under inves­tiga­tive scruti­ny and polit­i­cal uncer­tain­ty on the hori­zon, build­ing mate­ri­als teams must pre­pare to nav­i­gate con­tin­ued price pres­sures and sourc­ing chal­lenges. As cau­tioned in Bloomberg, tar­iffs are unlike­ly to mean­ing­ful­ly reduce trade deficits except through slow­er growth and invest­ment. This rais­es the stakes for com­pa­nies in the man­u­fac­tur­ing sec­tor. Those rely­ing on out­dat­ed quar­ter­ly sur­veys risk being caught flat-foot­ed, while those with time­ly, SKU-lev­el intel­li­gence will be bet­ter pre­pared to man­age risk and iden­ti­fy oppor­tu­ni­ties for growth.

Join Our Webinar

This blog is a pre­view of the trends Data­va­tions is track­ing around tar­iff changes. On Octo­ber 6th, 2025, join HIR­I’s host­ed webi­nar to hear from Data­va­tions, HIR­I’s Strate­gic Parter:

• Break down the pol­i­cy dri­vers behind 2025 tariffs.

• Reveal SKU-lev­el insights into the cat­e­gories and retail­ers most affected.

• Share strate­gies to help man­u­fac­tur­ers, dis­trib­u­tors, and retail­ers pre­pare for 2026.
  
  

Register now for the webinar to secure your spot.