For many New Zealanders, the soaring price of homes is no news. In fact, New Zealand’s housing crisis can be likened to a high-stakes casino game, where the odds are increasingly stacked against everyday Kiwis. And many are left wondering if they’ll ever hold a winning hand. Now, with the U.S. President Donald Trump reintroducing tariffs, there’s growing concern that these policies could further worsen the situation for New Zealanders. Many may wonder how this could happen, given that both operate different economies and are thousands of miles apart.
Well, as we know, the world is a small village, and oftentimes, one country’s economic decision may affect the other, especially if they are tied through imports and exports. And since both countries are (with regards to construction materials), it is almost given that house prices will soar. But first, let’s understand what the Trump tariff is all about.
Understanding Trump’s Tariffs
In March 2025, Donald Trump reinstated a series of tariffs. The target? To boost U.S. manufacturing and protect American industries. These tariffs set taxes on imported goods, making them more expensive for everyone. While this decision may seem protective of the US manufacturing industry, the aftermath echoes globally. And for countries like New Zealand, which rely heavily on imports for construction materials, this can well affect the housing sector.
How Tariffs Affect New Zealand Housing
Tariffs on basic building materials such as steel, aluminium, and lumber mean increased home construction costs. For instance, in the U.S. alone, these tariffs have added just about $10,900 to the cost of building a single-family home. New Zealand isn’t directly subject to these tariffs, but here is the catch: because countries depend on each other for trade, increased demand and prices in the U.S. can lead to higher costs worldwide.
New Zealand imports a large amount of its construction materials. And it’s no surprise to see how global prices rising due to U.S. tariffs can cause local builders to face higher expenses. And these are often passed on to homebuyers. This situation is particularly challenging in a market that is already strained by limited housing supply and high demand.
Struggles for First-Time Homebuyers
The increased costs of construction materials make it even more difficult for first-time homebuyers to enter the market. As building new homes becomes more expensive, developers may slow down projects. This often leads to a tighter housing supply. This scarcity drives up prices, making homeownership an elusive dream for many Kiwis.
Government Measures and Their Limitations
The New Zealand government, however, has taken steps to address the housing crisis. It has started easing zoning restrictions, which allow for more residential development. However, these measures may not be enough to counteract the external pressures caused by global trade policies.
Additionally, the government’s decision to cut funding for first-home grants and redirect resources towards social housing indicates a shift in focus. It is true that this may assist those in immediate need; however, it doesn’t necessarily ease or solve the broader affordability issues faced by the middle class.
The Broader Economic Implications
Beyond housing, tariffs contribute to overall inflation by increasing the cost of goods and services. This inflation erodes purchasing power, making it harder for individuals to save for a home. Higher living costs can lead to increased demand for rental properties, further driving up rents and exacerbating the affordability crisis.
Potential Solutions and the Path Forward
With potential housing crises staring the country in the face, there are a few solutions the government can embrace that may help mitigate the issues.
Addressing the housing affordability crisis in the face of global economic pressures requires a multifaceted approach, which includes:
- Diversifying Supply Chains: Reducing reliance on imported materials by investing in local production can help ease the impact of international tariffs on housing.
- Incentivising Affordable Housing: Providing tax breaks or subsidies to developers who build affordable housing can go a long way to increase supply.
- Financial Assistance Programs: The New Zealand government may want to reintroduce or expand grants for first-time homebuyers. This can indeed help bridge the affordability gap.
- Monitoring Global Trade Policies: Staying informed and adaptable to international economic changes allows for proactive policy adjustments.
Conclusion
The reimplementation of Trump’s tariffs has far-reaching consequences that extend beyond U.S. borders, impacting housing affordability in New Zealand. As construction costs rise and supply remains constrained, Kiwis face increasing challenges in achieving homeownership. Addressing this crisis necessitates both domestic policy reforms and strategic responses to global economic shifts. This responsibility weighs heavily on New Zealand’s government if relief is to be seen in no time, as the U.S. government is yet to express any inclination to lift these tariffs.