HVAC & Plumbing Contractors NAICS 238220

Apr 10, 2025 - Trump Administration Pauses Reciprocal Tariffs

• On April 9, the Trump administration paused its reciprocal tariff agenda for 90 days for most countries but left in place a baseline 10% import duty on all countries except China, which faces total tariffs of 145%. Canada and Mexico are not subject to the new 10% baseline tariffs, and goods trading under the US-Mexico-Canada Agreement will remain duty-free. Before the pause, industry analysts estimated that reciprocal tariffs would drive up costs for HVAC, plumbing, and electrical equipment, according to Facilities Dive. On March 12, the Trump administration’s 25% tariff on all US steel and aluminum imports went into effect, which could increase raw material and component costs for HVAC equipment and plumbing supply manufacturers. Manufacturers may pass higher equipment costs on to contractors, and if contractors can’t fully pass their higher costs on to customers, margins may suffer.
• The continued rise in the median age of US housing stocks may present opportunities for HVAC and plumbing contractors. In an April report, National Association of Home Builders analysis of US Census Bureau data showed that nearly half of owner-occupied homes were built before 1980. In 2023, the median age of owner-occupied homes reached 41 years, up from 31 years in 2005. Median home age has increased since the Great Recession when new housing production dropped dramatically. Since then, home building activity has not kept pace with demand. US homes require more maintenance and repairs as they age, driving remodeling spending. The lock-in effect of low mortgage rates during the pandemic is also prompting homeowners to renovate rather than move and face a higher interest rate.

• The total value of construction put in place increased 0.7% in February compared to January, according to the US Census Bureau. Spending on nonresidential projects rose 0.3% to a record $1.26 trillion. Residential spending grew 1.3%. Key areas of nonresidential building construction spending growth included amusement and recreation (up 1.3% in February over January) and commercial (+1.1); most other nonresidential building segments posted flat or negative growth. While public nonresidential spending was up 6.1% in February over the same month in 2024, private nonresidential spending has not kept pace, growing just 2.5% over the same period. In a press release, Associated Builders and Contractors Chief Economist Anirban Basu said, “The mix of high interest rates, tight lending standards, and unprecedented uncertainty regarding trade policy will continue to weigh on private sector construction in the coming months.”
• To protect their margins, HVAC contractors should pay close attention to the percentage of equipment and parts they install that is imported amid the Trump administration’s tariff-based trade policies, according to ACHR News. The US imports about $25 billion worth of HVAC products annually, and about 70% of imports come from countries affected by the tariff regime. HVAC contractor revenue and profits could suffer if tariffs push HVAC equipment prices higher, and consumers choose to trade down to less expensive replacement products or opt to repair instead of replace.