Flip-flopping tariffs create confusion, price uncertainty for builders in Lahaina

LAHAINA — In the three-bedroom, two-bathroom home that Cajudoy Construction is rebuilding in Lahaina, the concrete foundation had already been poured and the wood framing partially erected by Tuesday when President Donald Trump imposed tariffs — again — on Canadian and Mexican imports. 

The home’s Douglas fir lumber primarily was manufactured in the United States. But the Cajudoys are bracing for potential price increases on steel materials if the tariffs — which two days later were again postponed — eventually go through. 

For local contractors and suppliers, the flip-flopping tariff policy and escalating feud between the United States and two of its biggest trading partners have created uncertainty and potential price spikes at a time when Maui is rebuilding from the 2023 wildfires.

Cajudoy Construction’s owners say they’re trying to keep rates affordable. But they worry that rising costs could hold back property owners from rebuilding their destroyed homes.

“I think no matter what, the construction industry is going to keep moving forward,” said Brandy Cajudoy, who chairs the construction committee of the Ho‘ōla iā Mauiakama Disaster Long-Term Recovery Group. “But I think the question is more of like, are we going to have clients that can afford it? They already don’t have enough insurance right now to rebuild for the fire victims. So it’s just a bigger gap.”  

Maui’s recovery from the fires, originally pegged at $5.5 billion, is now expected to cost nearly $7 billion, according to a recent report by Maui County about how it plans to use a $1.6 billion federal disaster relief grant from the U.S. Department of Housing and Urban Development. 

County officials say they still expect to receive that funding even after recent attempts by the Trump administration to freeze federal grants and slash HUD’s workforce, but they say it’s too early to tell how policies like tariffs could impact the rebuild’s final cost.

Trump first threatened tariffs starting Feb. 1 before holding off for a month after Canada and Mexico took steps to address border security issues that the president used as his rationale.

On Tuesday, the 25% tariffs took effect on all imports from Mexico and most imports from Canada before Trump suspended them two days later for goods under the three countries’ trade agreement, which he signed during his first term. Another round of global tariffs is planned next week with a 25% tariff on aluminum and steel. 

Both Mexico and Canada have promised retaliatory tariffs, and China has already done so. 

Carl Bonham, executive director of the University of Hawai‘i Economic Research Organization, said federal policies and rebuilding in disaster zones like Los Angeles could “absolutely” have an impact on Maui.

“I would say in terms of construction, the Maui rebuild and the federal support for that is probably the most uncertain,” Bonham said Feb. 27 during a news conference on UHERO’s first-quarter economic forecast for Hawai‘i. 

Construction has been a bright spot for jobs on the islands, with government projects and rebuilding in Lahaina driving “one of the biggest building booms” the industry has seen, the report said. Since July 2023, Maui County’s construction workforce has grown by 8%, and it’s one of only three industries in the county, along with government and health care, that has seen a net gain since the fires. Statewide, the construction industry is expected to peak at nearly 41,000 workers in 2026, up from less than 37,000 in 2020. 

However, with cuts to the federal workforce and federal contracts, including ones for the University of Hawaiʻi, the report estimated the state could see a loss of 2,200 jobs, which is just “a first cut” and would offset the growth in construction. Overall, this raises the risk of an economic downturn in Hawai‘i, the report said. 

Tariffs also could make it difficult to calculate the cost of yearslong projects, as quotes from suppliers could change within weeks, Bonham said. That means builders have to take a risk and expect higher costs.

Mass deportations and migration rates that were already falling last year could also impact the national labor force, particularly in construction and agriculture, Bonham said. Demand and premium wages to rebuild in Los Angeles could also draw workers away from Hawai‘i.

“There are headwinds being created by federal policies for pretty much every industry in the state,” Bonham said. 

For now, he said, the U.S. economy is still strong, which means Hawai‘i could see more Mainland visitors to boost its tourism industry that is “stable, but not growing,” nearly two years after the Maui fires.

BIG NEED FOR FEDERAL AID

Maui’s recovery from the wildfires has relied heavily on federal assistance. Federal agencies were involved in the search and rescue, the cleanup of debris, the building of temporary housing and a temporary elementary school, and the rental assistance program for fire survivors.

In December, Maui County received more than $2 billion in federal disaster relief that included the $1.6 billion Community Development Block Grant Disaster Recovery funds from HUD and another $480 million for infrastructure repairs and other projects. 

In January, Trump tried to freeze federal grants and loans, but the move was blocked by two courts. 

John Smith, administrator of Maui County’s Office of Recovery, said the county is still on track to get the disaster recovery funds. 

“Those funds were allocated by HUD already, and that actually occurred prior to the new federal administration taking over,” Smith said Friday. “So those funds are secured, and we’re moving forward with HUD, with our action plan.”

The plan proposes putting $903.6 million of the grant toward housing after the fire destroyed 5,527 total residential units. The pie would be split between reconstruction of single-family and multifamily homes and new housing opportunities for impacted renters. The rest of the grant would cover $350 million for infrastructure, $213.8 million for mitigation, $90 million for public services and nearly $82 million for administration and planning.

The county is holding meetings this week and seeking public comment on the plan, which it expects to get approved by June.

“While $1.6 billion is a large amount, the unmet need is even larger, so we’ll do our best to help the most vulnerable first, and then we’ll go from there as far as building housing,” Smith said.

The current $7 billion cost of the rebuild “is a point-in-time estimate” and that it could change based on global factors, Smith added.

Alice Lee, chair of the Maui County Council that will begin budget talks later this month, said the county needs the federal funding — it simply doesn’t have enough in its $1.3 billion countywide budget to cover the shortfalls. 

“We shouldn’t need a Plan B,” Lee said. “We’ve done everything according to the requirements of the federal government, and we are now going through the process, and we’re very hopeful that the funding will come through.”

U.S. Rep. Jill Tokuda, whose district includes Maui County, said even with the grant, the speed at which Maui gets the funding could be impacted by the Trump administration’s plans to cut 84% of the staff in HUD’s Office of Community Planning and Development, which handles disaster grants like the one given to Maui County. 

The congresswoman said reimbursement requests are still coming in for the 2018 Puna lava flows on the Big Island, and having fewer staff to process paperwork could slow down the recovery on Maui and other disaster zones around the country. 

On Thursday, Tokuda, a Democrat, and 47 other members of Congress sent a bipartisan letter to HUD Secretary Scott Turner urging him to reconsider the cuts. Tokuda said it works in Maui’s favor that Republican states supporting Trump “have as much to lose as we do.”

“That money wasn’t just for Maui, right? When we passed that package, it had a lot of money for a lot of other states,” Tokuda said. “Many of them are red states where he has strong and loyal GOP supporters. This is where we need to stand collectively and say that this is harming all of us, and you can’t carve out one state that you don’t like and fund the rest.” 

REBUILDING AND ‘WAITING FOR THE DUST TO SETTLE’

When the Cajudoys rebuild a home, they always emphasize one thing to the owners: “Keep it simple.” The goal is to curb costs, especially now. Until the tariffs take full effect, they’re not sure how homebuilding costs in Lahaina will be affected. Lately, they’ve seen both American and foreign products increase in price at local suppliers. 

“Of course we’re worried about it,” Brandy Cajudoy said of the looming tariffs. “But life goes on and we’ll just have to figure it out. I mean, what are we going to do? We live in the middle of the ocean. Shipping is always an issue for us.” 

Predictions vary on how tariffs could negatively impact the cost of building a home. The National Home Builders Association puts the estimate cost increases at $7,500 to $10,000. But it’s unclear what that means for Hawai‘i, already the most expensive state to build a home. 

Suppliers already are telling the Cajudoys to try and get as many quotes in as they can to lock in prices, but even then they can’t guarantee it’ll stay at that rate. 

In general, Brandy Cajudoy said, American products are more expensive because of higher labor costs, so the tariffs might actually make imported goods roughly the same price. 

“I don’t think the tariffs are going to slow us up,” she said. “For us, whatever contracts we have in place and we’ve signed … we’re not going to change our prices. And a contractor shouldn’t change their prices because of this, especially if they have already signed something.”

Licensed contractor and former Lahainaluna High School teacher Derrick Montalvo said he’s also gotten letters from suppliers alerting him to price increases in February and March. Prices of American-made aluminum from one supplier were expected to increase by 25%, the highest of the rate hikes, according to an announcement shared with the Hawaiʻi Journalism Initiative.

Montalvo, whose home flooring is made of Canadian spruce, said “tariffs scare the hell out of me.” He said it’s hard enough to get items like refrigerators and stoves on Maui, and now the island will be competing with Southern California for some of the simplest materials. 

“The fear is not so much for me, it’s for the people,” he said. “It scares me for these poor people who are not going to have enough money to finish their house.” 

Montalvo said everyone is happy to see dozens of homes going up in Lahaina, but he’s worried that the pace is going much slower than it should. He expects the tariffs to slow down rebuilding, but “I don’t think anybody really knows what’s going to happen.”

According to the county’s recovery dashboard, six buildings had completed construction as of Feb. 18. A total of 647 building permit applications are in the pipeline, with 318 issued. 

Because only a few houses have been built so far, Honsador Lumber, a major local supplier with offices on four islands, hasn’t seen a big increase in orders, said Gene Anhorn, a lumber purchaser based in Honsador’s Oregon office.

Anhorn doesn’t expect a major impact from tariffs because Honsador primarily buys lumber within the United States. The company does bring in some lumber from a company in Canada, but he said it’s not enough to significantly impact their operations.

However, if the tariffs cause U.S. buyers of Canadian-manufactured spruce lumber to switch to purchasing Douglas fir, a popular lumber in Hawai‘i, that increased demand could drive up prices, he explained.

Anhorn declined to share how much lumber Honsador ships to Hawai‘i. He said he didn’t buy much this week because he was “waiting for the dust to settle” on tariffs. 

“I don’t see it affecting us that much yet but none of us really know what’s going on with it,” Anhorn said.

The National Association of Home Builders said Thursday it lobbied the White House to include lumber among the products whose tariffs are delayed until April 2.

Danny Palakiko, owner of Kanaka Construction, said he hasn’t seen a squeeze yet on materials like lumber and steel but that the hundreds of approved building permits could put a strain on materials and the local workforce. Some companies that offer the same kinds of supplies have even talked about lending each other warehouse storage space, a shift from competition to cooperation.

“That was unheard of prefire,” Palakiko said. “It’s time to rethink the way that we operate so that we can truly meet the need at the pace that is being demanded of us.” 

Palakiko is the founder of the Maui Construction Industry Coalition that was formed after the fires to allow industry professionals to network and get resources out to the community. It also includes Montalvo and the Cajudoys.  

When asked whether tariffs could slow down the rebuild, Palakiko said, “I sure hope not.” He pointed out that it’s not the first time the United States has played hardball with other countries and that “history will show us that we’ve had to roll with the punches.” 

People in Hawai‘i are especially good at banding together to afford living here, Palakiko said. His company is partnering with Samaritan’s Purse and Betsill Brothers to build about 50 homes for people with very little or no insurance coverage. The recovery group Cajudoy is involved with is working with the Mennonite Disaster Service to build five homes for residents facing a funding gap for their rebuild. 

“Because we live in that constant mindset of just dealing with the compressed and depressed circumstances of our economy and our lifestyle, this is just one other added component that when it hits us, we’re already going to be rolling with the punches,” he said. “Because what’s the alternative? Everybody give up and just move off the island? … We gotta figure something out.”