HVACR Equipment Manufacturers NAICS 3334

May 16, 2025 - Tariffs to Increase HVAC Equipment Prices

• The Trump administration’s tariff policies will likely increase prices for HVAC equipment, according to Facilities Dive. 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 faced 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. The president of government affairs of the Heating, Air Conditioning, and Refrigeration Distributors International said in a statement that the tariffs will affect eight of the top 10 exporters of HVACR equipment to the US, and that any increased costs would likely be passed on to consumers. On May 12, 2025, the US and China declared a 90-day reduction in the tariffs each country imposed on the other amid further negotiations. The US tariff on imports from China was reduced from 145% to 30%, while China dropped its duty on US imports from 125% to 10%.
• US home builders are dangling more incentives to close deals amid a tepid spring home-buying season that is halfway over, according to The Wall Street Journal. Builders typically notch 40% of their annual sales during the spring, but mortgage rates that are stuck around 7% and a lack of affordability have reduced demand. Builders have increased incentives to bring buyers off the sidelines, including mortgage-rate buydowns, design upgrades, and price cuts. In the first two weeks of April, incentives offered by builders equaled 7.2% of the purchase price, up from 6.1% in January, according to data from John Burns Research & Consulting. Incentives are eating into builder profits during a season that usually sees few discounts, and prices tend to rise. New home construction is a key demand driver for HCAV equipment.

• North American construction and engineering spending in 2025 is expected to grow by 3% after increasing an estimated 7% in 2024, according to FMI’s second-quarter 2025 North American Engineering and Construction Outlook. Nonresidential building construction spending is forecast to be flat in 2025 as growth in amusement and recreation (+7%), transportation (+3%), public safety (+3%), and educational (+3%) is offset by weakness in commercial (-7%), lodging (-5%), and manufacturing (-1%). Amid high mortgage interest rates and a lack of affordability, single-family construction spending is forecast to rise by 3% in 2025. A recent jump in new apartment supply and unfavorable cost conditions will reduce multifamily spending by 12% in 2025.
• Multifamily developer confidence declined in the first quarter of 2025, according to the National Association of Home Builders’ (NAHB) latest Multifamily Market Survey. The Multifamily Production Index (MPI) fell three points in Q1 2025 to 44 compared to the first quarter of 2024. The Multifamily Occupancy Index (MOI) decreased by one point to 82 over the same period. An MPI or MOI reading of 50 or more indicates that multifamily production or occupancy, respectively, is growing. Multifamily developers’ headwinds include a tight lending environment, higher borrowing costs, and regulatory difficulties. More than half of multifamily builders surveyed said their suppliers had raised prices in response to announced, enacted, or anticipated tariffs. While multifamily construction activity is expected to remain weak for the remainder of the year, the NAHB projects a modest recovery will take hold in 2026.