Tariffs in 2025 have reached their highest levels since 1933, adding roughly $2,200 in annual costs per U.S. household. Building materials are not absorbing this evenly. Lumber is up 19% year-to-date, power tools have seen price increases on 63% of SKUs — nearly double last year’s rate — and retailers are responding with SKU rationalization, inventory prebuild, and selective increases. The impact is category-specific, and the suppliers reading it at the SKU level are the ones navigating it.
The Tariff Footprint Is Not Uniform
The assumption that tariffs raise all prices equally is wrong. Lumber is up 19% YTD. Lawn and garden is up 14%. General building materials are up 3%. Bath is flat. Kitchen and flooring are actually down. The variation comes from sourcing mix, tariff schedule exposure, and how aggressively retailers pass costs through.
Only one-third to one-half of tariff costs have reached consumers so far. The rest sits in compressed margins — a gap that cannot hold indefinitely.
Power Tools: The Hardest-Hit Category
Power tools tell the clearest tariff story. In 2025, 63% of power tool SKUs showed price increases, compared to 34% the prior year — nearly a 2x jump. Power sanders were hit hardest, with over 80% of SKUs affected. Lowe’s moved broader and deeper than Home Depot, raising prices on 69% of power tool SKUs versus 58% at Depot.
The data reveals a critical price cliff at $400. Below that threshold, demand held. Above it, consumers traded down. For manufacturers positioning products near that line, the difference between $389 and $419 is not $30 — it is a fundamentally different purchase decision.
Lumber: Prebuild and the Stockout Play
Sixty-four percent of lumber SKUs saw price increases, but the comparison point matters — 2024 was anomalous due to mill closings and supply disruptions, so the meaningful benchmark is 2023. Against that baseline, the tariff-driven increase is roughly 20 points above trend.
Retailers responded tactically. Lumber inventories surged in January and February as buyers locked in pre-tariff pricing. That prebuild paid off: stockout losses dropped 56%. The retailers who built inventory early preserved margins and kept shelves full while competitors scrambled.
Items with greater than 10% price increases saw revenue decline 5.5% year-over-year. Items with less than 5% increases grew 11%. The revenue gap between those two buckets — controlled and uncontrolled price movement — is the clearest evidence that tariff pass-through strategy matters more than tariff exposure.
Retailer Responses: Two Different Playbooks
Home Depot and Lowe’s are running visibly different strategies. Home Depot limited broad hikes, then moved to modest, selective increases in specific categories — surgical, raising where the consumer can absorb it. Lowe’s is monitoring daily with broader, deeper price action. In April, Lowe’s executed significant SKU rationalization in power tools — cutting underperformers to concentrate volume on surviving SKUs.
Both carry risk. Home Depot’s restraint compresses margins for volume stability. Lowe’s rationalization clears the shelf but creates openings for competitors whose products get dropped.
What Manufacturers Should Do Now
The manufacturers navigating this well are doing three things. First, they understand their assortment’s uniqueness — which SKUs have no substitute on the shelf and which are commodity items a retailer could replace. Scenario-building for rationalization before the retailer acts is the difference between defending placements and reacting to lost ones.
Second, they know their price elasticities at the SKU level. The $400 cliff in power tools did not appear in category averages — it only showed up in SKU-level transaction data. Knowing where your products sit relative to consumer thresholds determines whether a tariff increase costs you volume or just shifts margin.
Third, supply chain agility. Manufacturers positioned as backup suppliers in tariff-affected categories are winning spot buys and incremental placements.
Datavations tracks every SKU, every store, every sale across 11,936+ locations daily — the granularity needed to see price cliffs, inventory prebuilds, and rationalization moves as they happen, not after the quarter closes.
How are tariffs affecting building materials prices in 2025?
Tariffs in 2025 are at their highest since 1933, but the impact varies sharply by category. Lumber is up 19% YTD and power tools have seen price increases on 63% of SKUs. Bath is flat and kitchen is actually down. Only one-third to one-half of tariff costs have been passed to consumers so far.
Which building materials categories are most affected by tariffs?
Power tools and lumber are the hardest hit. Power tools saw price increases on 63% of SKUs — nearly double the prior year — with power sanders above 80%. Lumber saw increases on 64% of SKUs, with a clear revenue cliff: items above 10% increases lost 5.5% in revenue while items below 5% grew 11%.
How are Home Depot and Lowe’s responding to tariffs differently?
Home Depot limited broad hikes and moved to selective, modest increases. Lowe’s monitored daily with broader and deeper price action, including significant SKU rationalization in power tools in April. Both built lumber inventory early, cutting stockout losses by 56%.
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