Mexico’s housing sector is expected to face cost increases of 3 to 4% this year due to U.S. tariffs on steel and aluminum. The situation raises concerns about investment stability and domestic employment. Additionally, Mexico’s housing shortage persists, prompting government initiatives to stimulate construction amid declining steel production.
The Mexican housing construction sector faces a potential cost increase of 3 to 4% this year due to a 25% tariff imposed by the United States on steel and aluminum imports, as reported by the Mexican Chamber of the Construction Industry (CMIC). This tariff, effective since March 11, particularly affects Mexico, a key supplier alongside Canada and Brazil. In light of these developments, U.S. President Donald Trump has suggested imposing further tariffs on additional Mexican goods beginning April 2, raising concerns about further escalated costs.
Carlos Eduardo Ramírez Capó, President of the National Chamber of the Housing Development and Promotion Industry (Canadevi), emphasized that while investments in housing projects remain stable, developers are adopting more cautious approaches. He assessed, “The damage will be directly proportional to the duration of the tariffs if it is imposed,” signaling worries about prolonged tariff impacts on the sector.
Furthermore, Rodrigo Padilla Quiroz, CEO of the Mexican Real Estate Bank (BIM), indicated that there has been no outright cancellation of projects yet, although caution is palpable within the industry. He highlighted that rising material costs are not the only concern; the implications of U.S. trade policies on domestic employment in the construction sector are also critical. Padilla stated, “The biggest concern is a slowdown in [domestic] employment,” which could adversely affect the ability of families to build wealth through property.
In terms of housing supply, Mexico is currently contending with a significant housing deficit estimated at eight million homes. The year 2024 saw a mere 128,147 housing units completed—the lowest since the inception of the Single Housing Registry in 2013—of which approximately one-third were low-income projects priced at an average of 521,484 pesos (approx. US $26,000).
President Claudia Sheinbaum’s recent initiative to construct one million homes over the next six years at a cost of 600 billion pesos (around US $29.7 billion) aims to revive the housing market significantly. On the production front, Mexico’s steel production decreased to 18.2 million tonnes in 2024 from 19.85 million tonnes in the previous year due to reduced demand, complicating the industry’s recovery efforts. While steel mills plan to enhance their output by over five million tonnes annually by mid-2026, fluctuating domestic and overseas demand may present ongoing challenges, as reported by Argus Media.
In conclusion, the implementation of tariffs on steel and aluminum imports from the United States poses significant challenges for Mexico’s housing construction sector, potentially leading to increased costs and cautious investment practices. The industry is currently grappling with a substantial housing shortage, while policymakers are proposing new initiatives to stimulate construction. The interdependencies between trade policies, construction costs, and employment in the sector highlight the urgency for strategic responses to mitigate the impacts of international trade relations.
Original Source: mexiconewsdaily.com
