Tariff Uncertainty Casts Shadow Over Southern California Wildfire Rebuilding Efforts
LOS ANGELES – Uncertainty surrounding a new wave of import tariffs is creating significant challenges for Southern California home builders and real estate developers, particularly those involved in rebuilding neighborhoods devastated by the January wildfires. The situation is intricate by the unpredictable nature of which imports will be affected and when the tariffs will take effect, leaving many contractors struggling to budget effectively.
wiht an estimated 16,000 homes, businesses and other structures destroyed, the wildfires are expected to spark a massive construction boom across the region, including in communities like Pacific Palisades and Altadena. However, this rebuilding effort is now threatened by potential price increases and supply chain disruptions due to the tariffs.
Builders are expressing frustration over the ambiguity surrounding the cost of essential construction materials like windows, doors, plumbing, lighting fixtures and appliances – many of which are sourced from China and now subject to duties as high as 145%. This uncertainty is forcing contractors to make hasty purchasing decisions, accelerating price increases that are ultimately passed on to consumers.
Cory Singer,a general contractor overseeing 10 rebuild projects in Pacific Palisades,including the first home under construction in the fire zone,said his company is adding a 5% to 10% contingency to project budgets to account for “market volatility.” He recounted how a tile supplier recently informed him of an immediate 10% price hike if an order wasn’t placed immediately, a warning he is now relaying to his clients.
“We’re padding a 5% to 10% contingency for what we’re calling ‘market volatility’ into the budget,” Singer said. He added that some clients are considering storing materials in containers on their properties to buy them over the next few weeks before costs rise even further.
Bryan Wong, chief executive of San Gabriel Valley Habitat for Humanity, echoed these concerns. His organization recently received the first permit to rebuild in Altadena and is working with two dozen low-income property owners seeking assistance. Wong described the tariff debate as “scaring the crap out of me.”
“I don’t think there’s a single person out there alive who thinks we’re done with this conversation,” Wong said, highlighting the instability caused by frequent policy shifts and retaliatory actions from other nations. “this list is going to grow and is going to change.”
The uncertainty extends beyond just material costs. Anirban Basu, chief economist for Associated Builders and Contractors, a national trade group, noted that while the construction industry initially had a promising outlook for the year, the current landscape is far less optimistic. Factors such as fluctuating oil prices, a weakening global economy and volatile trade policies have all contributed to the shifting sentiment.
Basu also highlighted the impact of the governance’s immigration policies on the construction industry, which relies heavily on foreign-born labor. The ambiguity surrounding the legal status of these workers adds another layer of complexity to the challenges facing builders.
“Construction makes outsized use of foreign-born workers,” Basu said, adding that it is often unclear whether those workers are documented or undocumented.
