CHINO, Calif. — Where some just see lumber, Marc Saracco, a sales manager at wholesale distributor Capital Lumber Company, sees the building blocks of new communities.
What You Need To Know
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On Tuesday, the U.S. placed a 25% tariff on imports from Mexico and Canada, with a 20% tariff for products from China
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The new tariffs sent shockwaves through global trade, expected to impact the cost of rebuilding after the Los Angeles-area fires
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The U.S. gets about 30% of their lumber from Canada every year, and a majority of home appliances are manufactured in Mexico before being sold in the U.S.
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Experts say the tariffs impacts $1.5 trillion in annual imports
Although with the 25% tariffs President Donald Trump is placing on imports from Mexico and Canada, Saracco said those building blocks are expected to get more expensive.
“Undoubtedly, the tariffs would be felt. I estimate that the tariffs from appliances to lumber would cost a homeowner between $30,000 and $40,000 per house,” Saracco said.
He said it’s an additional challenge that could exacerbate the current housing shortage.
“We as an industry rely heavily on what they produce. About 30% of the lumber that we consume in the United States comes from Canada,” Saracco said.
That is not to mention the enormous task Los Angeles faces having to rebuild more than 15,000 homes and structures that were lost during the January fires.
“You’re talking about $600 million just in the scale of the rebuild in additional tariffs to meet those 15,000 homes that absolutely need to be rebuilt,” Saracco said.
Having this insight into the industry has not only been hard to stomach as he thinks about the future of his business but also hurts as a Pasadena resident who personally knows families who have lost everything.
“These are my friends, these are my neighbors, this is my community, and I could be a part of the healing process. And that’s what drives me every single day when I go to work,” Saracco said.
He said he doesn’t think the rebuilding effort from the fire will have an immediate impact the way tariffs will, but does expect to see that demand from rebuilding closer to next year.
The sticker shock, he mentions, will not just be due to lumber. Nearly 30% of the $2.9 trillion worth of goods the U.S. brings in every year come from Canada and Mexico, according to the Census.
With domestic sawmills closing, Saracco said it would take 10 to 20 years before the U.S. can internally meet lumber demand.
“We do not produce enough lumber, and it could take decades for us to ramp up our domestic production to meet that. It’s not something that could happen overnight,” Saracco said.
However, rebuilding takes more than just lumber. Contractors are also keeping an eye on things like steel, which Canada was a top supplier of to the U.S. in 2023, according to the American Iron and Steel Institute.
Looking to be proactive, Steve Rule, vice president of Turner Construction Company, said they have been preparing for these tariffs since President Trump’s campaign, when the idea was first floated.
“You know, we’ve been planning for this as a company, looking primarily at where can we get ‘X’ other than internationally. Right, so other suppliers, local domestic suppliers of the same material, we might have bought a year ago from a supplier overseas,” Rule said.
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He said that currently only about 10% of their material comes from a foreign source, so they are not too worried about their bottom line, but does say that domestic prices can also increase with a tariff on foreign products.
“We did see domestic prices rise in the first Trump administration with the implementation of tariffs. There is both the encouragement of developing our domestic manufacturing that comes with tariffs, but there’s also, if the guy has got to pay $10 extra to get the material from China, then I could raise my price to $9 and they’ll buy it for me and everybody will be happy,” Rule said.
He expects the tariffs would increase the price of their projects by about two to 3% this time around.
As for Saracco, he’s said the whiplash of February’s tariff pause brought yet another challenge.
“We have a great relationship with our partners to the north, and we know that it’s already a little bit of a challenging time right now to do business with interest rates where they’re at. And this just further complicates some of the complexity of doing this business in the first place. Uncertainty is hard,” Saracco said.