U.S. tariffs on steel and aluminum are expected to raise construction costs in Mexico by 3-4%, prompting cautious investment from developers. With ongoing housing shortages, plans for one million new homes may relieve some pressure, but tariffs could further impact employment and purchasing power in the sector.
The recent implementation of a 25% tariff on steel and aluminum imports by the United States is anticipated to elevate construction costs in Mexico by 3 to 4% this year, as reported by the Mexican Chamber of the Construction Industry (CMIC). The imposition of these tariffs on March 11 affects Mexico, which is a major supplier of these materials alongside Canada and Brazil. Additionally, U.S. President Donald Trump has hinted at more tariffs on other Mexican products, set to commence on April 2, further complicating the economic landscape for the housing sector.
Carlos Eduardo Ramírez Capó, president of the National Chamber of the Housing Development and Promotion Industry (Canadevi), stated that while investments in housing projects have not yet declined due to these tariffs, developers are adopting a more cautious approach. Ramírez noted, “The damage will be directly proportional to the duration of the tariffs if it is imposed… if we don’t reach an agreement… there will be an impact.”
Rodrigo Padilla Quiroz, CEO of the Mexican Real Estate Bank (BIM), echoed similar sentiments, remarking that there have been no project cancellations reported thus far. He emphasized that the concern extends beyond rising costs to how U.S. trade policies may affect employment within the construction industry. Padilla highlighted that the most significant concern revolves around “a slowdown in [domestic] employment” affecting families’ abilities to amass property wealth, thus impacting their purchasing power.
The housing market in Mexico is challenged by a notable shortage of approximately eight million homes, with only 128,147 homes constructed in 2024 — the lowest figure since records began in 2013. Of these, 33.62% were low-income residences averaging 521,484 pesos (approximately US $26,000). In response, President Claudia Sheinbaum announced a plan to create one million new homes within six years, investing 600 billion pesos (US $29.7 billion) to stimulate the housing sector.
On the industrial front, Mexico produced 18.2 million tonnes of steel in 2024, a decrease from 19.85 million tonnes in 2023 due to diminished demand. The country exported three million tonnes, with two-thirds directed towards the United States. Notably, Mexican steel mills anticipate enhancing production capacity by an additional five million tonnes annually by mid-2026, although they now face potential challenges from waning overseas demand alongside a weaker domestic market.
The introduction of U.S. tariffs on steel and aluminum is likely to increase construction costs in Mexico and poses challenges to investment and employment in the housing sector. Although production targets may rise in the coming years, the overall health of the industry could be jeopardized by tariff repercussions and a current housing shortage. The planned construction of one million homes by the government may alleviate some pressure on the market, but careful monitoring of the situation is essential to protect both domestic developers and consumers.
Original Source: mexiconewsdaily.com
