As Tariffs on Mexico and Canada Go into Effect Tuesday, Prospective Home-Buyers, Local Businesses From Building Industry to Craft Beer to Suffer

As tariffs on Canada and Mexico go into effect on Tuesday, March 4, local San Diego industries prepare to suffer. From the building industry and new homes to the city’s craft beer businesses, all expect to be hurt.

Even while U.S. Commerce Secretary Howard Lutnick said on Sunday, March 2 that Trump will determine whether to stick with the planned 25% level or not, San Diego will undoubtedly be affected negatively.

For example, Nat Bosa is a developer whose company, Vancouver, Canada-based Bosa Development, is in the middle of construction on a 389-unit condo tower called Andia in downtown San Diego, with plans to build a 211-unit apartment building next to Children’s Park. He is flabbergasted at the looming tariffs.

Bosa told the U-T, “To have the illusion (tariffs) would not cost us more money is absolute insanity. Right now, we have no idea to what extent.”

Bosa said the Trump administration’s new 25% tariff on all steel and aluminum entering the U.S. will mean cost increases for apartment and condo developers, many of whom have reshaped downtown’s skyline for more than a decade. …

He declined to say if they were pausing any projects. Some of his company’s recent buildings have been the 41-story condo tower Pacific Gate off of Harbor Drive, the 43-story condo tower Electra on E Street and the 41-story Diega apartment complex on Broadway.

The U-T reports:

Steel and aluminum tariffs are slated to start on March 12 but exactly how much of that cost builders will have to bear is still being calculated by developers and housing experts. Even if it is just, say, a 2% cost rise, it will make a significant difference for residential builders, said Nathan Moeder, principal with real estate analysts London Moeder Advisors.

“I think we’re capped out on developers’ cost burden,” he said. “So, if we are increasing costs more, developers will have to make a choice: Do we proceed with the project by increasing our rents? Or do we revisit things?”

Prices have already started rising, with the two of the biggest U.S. steel producers raising prices when tariffs were announced in early February. U.S. Steel increased its price for a ton of flat-rolled steel by $50 in February, and Nucor up $60 a ton.

The U-T also reported that “Lori Holt Pfeiler, CEO of the San Diego County Building Industry Association, had already raised alarm bells over potential Canadian tariffs that could affect the homebuilding industry. Almost all San Diego County homebuilders use Canadian lumber.” …

“Tariffs do not help with housing costs,” Pfeiler said.

It also reported that, “There are roughly 4,000 new apartments opening in San Diego County this year, but it was looking like a slowdown was on the way even before tariffs were announced. Slowed rent gains, higher interest rates and increased labor cost were all seen as factors.”

Outside of housing, steel and aluminum tariffs are likely to affect other industries, such as electronics, auto and packaging for groceries.

One of those industries affected by Trump’s tariffs on aluminum and steel could crush San Diego’s struggling craft breweries.

With more than 150 craft breweries, Chris Cramer, the co-founder of Karl Strauss Brewing Company, said San Diego is the undisputed craft brewing capital in the United States. A 2021 report said craft beers added around $300 million to the local economy, but the 25% tariff could crush the industry. …

Cramer told KPBS:

“A lot of the little guys who don’t have the resources and the experience that we have won’t necessarily make it,” he said. “And that’s particularly concerning because craft breweries are such an integral part of San Diego’s lifestyle now.”

Last year, more breweries closed than opened.

The tariffs would hit all aspects of the industry, from the steel used to brew the beers to the kegs used to store them to the cans to sell them.

“Any increased costs for brewing equipment, kegs or cans would add financial strain to small producers already navigating a competitive market,” San Diego Brewers Guild executive director Erik Fowler said in a statement.

Speaking of small businesses, a Point Loma flower shop is in trouble. The Little House of Flowers has been at their location for about 3 and a  half years. Over that time, they’ve seen prices for flowers skyrocket. Now faced with tariffs, it’s “scary” for t he business because it imports a lot of their flowers. The owner said, “We primarily get our flowers from South America, but we get them all over: The U.S. Canada, Hawaii, all over the place.”  10News

And 7SanDiego reports that tariffs on building materials will add even more pressure on the U.S. housing market, already struggling under the weight of high mortgage interest rates, a low supply of existing homes for sale and historically high home prices.

Roughly 30% of softwood lumber consumed in the U.S. is imported, largely from Canada. Wallboard, known as gypsum, is imported from Mexico. The 25% tariff President Donald Trump levied on goods from the two key trading partners will make those products that much more expensive. The Mexico tariffs were postponed for a month Monday, but they are still on the table in the future.

“More than 70% of the imports of two essential materials that home builders rely on — softwood lumber and gypsum — come from Canada and Mexico, respectively,” wrote Carl Harris, chairman of the National Association of Home Builders in a release. “Tariffs on lumber and other building materials increase the cost of construction and discourage new development, and consumers end up paying for the tariffs in the form of higher home prices.”

Now obviously, Trump’s supporters don’t building housing, are not looking for new housing and don’t drink craft beer or buy flowers, so they will be well insulated from all the mess and chaos that tariffs will unleash. It will just affect the rest of us.