Construction industry braces for tariffs and deportations

DALLAS – The Wall Street Journal reports that two decades ago, McKinney, a booming suburb on the northeastern edge of Dallas was a small town accessed by only a two-lane highway. Now, 200,000 people fill its sprawling subdivisions, with new construction everywhere. McKinney, like the country’s other fastest-growing cities, is a town built by imported labor and home to an industry hooked on imported steel and lumber. That leaves the construction industry particularly vulnerable to President-elect Donald Trump’s vow to deport millions of undocumented immigrants, and his threats to introduce new tariffs on Mexico and Canada. “We will absolutely have a labor shortage,” said George Fuller, a longtime Texas developer who is also mayor of McKinney. “Whether you want to acknowledge it or not, these industries depend on immigrant labor.” The McKinney mayor, who describes himself as a Reagan Republican, said he would prefer all workers to be documented and would like to see more materials produced in the U.S. But he said he thought a heavy-handed approach of deportations and tariffs would be a painful way to advance those goals.

“The short-term impact, I don’t want to say devastating, but it would be a significant impact,” he said. In Texas, California, New Jersey and the District of Columbia, immigrants make up more than half of construction trade workers, according to Riordan Frost, a senior research analyst at the Harvard Joint Center for Housing Studies. Undocumented workers make up an estimated 13% of the construction industry—more than twice that of the overall workforce, according to a recent estimate from Pew Research Center. Trump, a former real-estate developer himself, has said he would support the construction industry by easing regulations and allowing more building on federal land. But many economists and builders say the loss of the immigrant workforce would drive up the cost of wages for some positions and leave others unfilled. On top of that, the president-elect’s proposed tariffs of 25% on Canada and Mexico could increase the cost of construction materials. Overall, about 7.3% of home-building materials are imported, according to the National Association of Home Builders. Softwood lumber, used to frame buildings, often comes from Canada, which now has a tariff of 14.54%. The U.S. is also the world’s top importer of the crucial housing materials iron and steel. About a quarter of America’s $43 billion in imported iron and steel came from Canada as of 2022, according to the Observatory of Economic Complexity.