Mexico’s construction costs are expected to rise by 3-4% due to U.S. tariffs on steel and aluminum. The tariffs, imposed on March 11, have not yet deterred investment in housing projects, although caution prevails among developers. A housing shortage of eight million homes persists, despite plans for new construction supported by significant investment.
The Mexican housing sector is poised to face significant challenges due to the recent introduction of 25% tariffs on steel and aluminum by the United States. According to the Mexican Chamber of the Construction Industry (CMIC), the cost of housing construction may rise by 3 to 4% this year. The tariffs took effect on March 11, and with Mexico being a primary supplier of these materials, the implications are substantial.
U.S. President Trump has indicated the possibility of imposing tariffs on additional Mexican goods starting April 2, which could amplify the looming cost increases. Carlos Eduardo Ramírez Capó, President of the National Chamber of the Housing Development and Promotion Industry (Canadevi), noted that while investment in housing projects remains steady for now, there is considerable caution among developers regarding future investments.
Ramírez emphasized the potential long-term effects, stating, “The damage will be directly proportional to the duration of the tariffs if it is imposed.” A prolonged tariff period could jeopardize the housing sector’s stability. Further caution was echoed by Rodrigo Padilla Quiroz, CEO of the Mexican Real Estate Bank (BIM), who highlighted concerns regarding the tariffs’ impact on employment within the construction sector. Padilla remarked that the rising material costs not only affect construction but also hinder families’ ability to build property wealth, thus diminishing purchasing power.
Additionally, Mexico faces a housing shortage estimated at approximately eight million homes. Despite the challenges, the construction of residential properties saw a troubling decline in 2024, recording the lowest levels since tracking began in 2013. Notably, low-income housing projects accounted for about one-third of residential construction in 2024, with averages pricing at 521,484 pesos (approximately US $26,000).
To address this housing deficit, President Claudia Sheinbaum has unveiled plans to construct one million new homes over the next six years, supported by an investment of 600 billion pesos (US $29.7 billion), potentially revitalizing the sector. Moreover, while steel production in Mexico decreased to 18.2 million tonnes in 2024, plans to increase production by over five million tonnes annually by mid-2026 signal a proactive response to ongoing challenges. However, a slowdown in domestic demand may still pose significant risks for manufacturers.
In summary, the imposition of tariffs on steel and aluminum is set to impose further strains on Mexico’s housing sector, leading to increased construction costs and potential employment impacts in the construction industry. The ongoing housing shortage continues to challenge the sector, notwithstanding the strategic plans for new home construction set forth by the government. Moving forward, the interplay between domestic demand and international trade policies will be crucial for the sector’s recovery and stability.
Original Source: mexiconewsdaily.com
