HVACR Equipment Manufacturers NAICS 3334

Mar 17, 2025 - HVAC Contractors Brace for Tariffs

• 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. On March 4, 2024, the Trump Administration paused tariffs on US imports from Mexico and Canada for one month for products that are compliant with the United States-Mexico-Canada Agreement (USMCA). On February 3, a 10% tariff on goods from China went into effect. 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 equipment manufacturer 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.
• On March 12, the Trump administration imposed 24% tariffs on all US imports of steel and aluminum, which are expected to increase the costs of many downstream metal products, according to the Associated Press. The new tariffs will affect nearly 290 downstream steel and aluminum products, including air conditioner parts and evaporator coils, that are valued at almost $150 billion, according to Reuters analysis of US import data. The Trump administration hopes the tariffs will prompt more reshoring of US metal production and boost US manufacturing jobs. However, some equipment manufacturers suggest most production of small metal components has moved offshore. For some, paying the tariff may be cheaper than establishing domestic production or locating a US supplier. Some manufacturing industry insiders believe any increase in manufacturing costs would likely be passed on to customers.

• A lack of affordability in the new, single-family home market could reduce demand for HVAC equipment for new residential construction projects. In 2025, nearly 75% of US households are unable to afford a median-priced new home, according to the National Association of Home Builders. Given a median new home price of $459,826 and a 30-year mortgage rate of 6.5%, more than 100 million US households are priced out of the market. In 23 US states and Washington DC, more than 80% of households cannot afford a median-priced new home, suggesting a significant discrepancy between home prices and household incomes.
• The value of total US construction spending decreased by 0.2% in January 2025 compared to December, according to the US Census Bureau. Residential spending fell by 0.5%, while nonresidential spending grew by 0.1%. Within the nonresidential building construction subsector, growth in January was led by a 0.7% rise in spending for lodging projects, followed by healthcare (+0.6) and office (+0.4%). Drops in commercial, educational, and multifamily housing spending dragged overall building construction spending in January. High interest rates continue to weigh on US construction activity, and import tariffs could present additional headwinds, according to Reuters.