Donald Trump did not immediately impose 25 percent tariffs on Canada and Mexico, as previously promised, after being sworn in on Monday, taking a “more benign than expected” course of action that could help bring down mortgage rates, according to real estate brokerage Redfin.
“For housing, the most tangible immediate consequence of Trump taking office is that mortgage rates will come down slightly,” Redfin economist Chen Zhao wrote on Tuesday. “That’s because action on tariff policy has been more benign than expected so far.”
Why It Matters
The ongoing affordability crisis in the U.S. housing market, triggered by skyrocketing prices, a chronic lack of inventory, and high mortgage rates, had been a massive topic during the 2024 presidential race.
Trump has promised to lower the cost of housing and increase inventory during his second presidency, and experts are waiting to see which of the policies he suggested during his campaign he will implement, and what impact they’ll have on the market.
What To Know
During his presidential campaign, Donald Trump had promised that he would impose tariffs as high as 25 percent on allied countries like Canada and Mexico as quickly as he was sworn in. But this threat did not immediately materialize on Monday, when the president said his administration will wait until February 1 to impose 25 percent tariffs on the two countries.
Trump said on Tuesday that more tariffs will also come for China, the U.S.’s second-biggest trading partner. The president indicated he’s considering a 10 percent across-the-board tariff on all Chinese products starting as of February 1 as well.
But despite the clear threats made by Trump, Zhao found that the president’s remarks on China were “significantly less hawkish” compared to his recent commentary “and the trade policy memo that was uncovered.”
While additional tariffs on China are still likely on the horizon, “they now appear to be a lower priority,” Zhao said. “Twenty-five percent tariffs on goods from Canada and Mexico are still a distant possibility, despite remarks suggesting a February 1 timeline,” she added.
“He made similar remarks about Mexico in 2019 that never materialized. And his recent pledge was to implement these tariffs on Inauguration Day, but he is now kicking the can down the road,” the economist wrote in a Redfin update. Zhao thinks that a universal tariff now seems unlikely given Trump’s remark that “[he] may, but we’re not ready for that yet.”
A subdivision has replaced the once-rural landscape on July 19, 2023, in Hawthorn Woods, Illinois.
Scott Olson/Getty Images
Trump’s trade policy memo instructs administration officials to report back on progress by April 1, “suggesting that any changes would come in Q2 at the earliest, and that there is no agreement within the administration on their approach,” Zhao wrote.
“Mortgage rates will see some relief as near term action on broad-based tariffs seem less likely,” Zhao concluded.
How High Are Mortgage Rates Now?
According to the Federal Home Loan Mortgage Corporation, better known as Freddie Mac, the 30-year fixed mortgage rate was 7.04 percent as of January 16, up 0.11 percent from a week earlier and up 0.44 percent from a year earlier.
This latest increase marked the fifth-consecutive week of mortgage rates ticking up, despite recent interest rate cuts by the Federal Reserve. It was the first time since May 2024 that mortgage rates surpassed the seven percent mark.
According to Freddie Mac, these increases are due in part to “the underlying strength of the economy.” Stubbornly high mortgage rates are discouraging homeowners from putting their homes on the market, while also keeping aspiring homebuyers on the sidelines.
Tackling the Housing Affordability Crisis Is ‘A Priority’
Zhao said that Trump’s day-one actions proved that tackling the U.S.’s ongoing housing affordability crisis “will be a priority” for the newly sworn in president, even though not as much as curbing immigration.
An executive order signed by Trump on Monday asked executive departments and agencies to deliver emergency price relief, “consistent with applicable law” to the American people. That includes lowering the cost of housing and expanding housing supply and eliminating counterproductive requirements that raise the costs of home appliances, among others.
According to Zhao, Trump’s policies around lowering the cost of housing “are vague at this point, and are unlikely to have immediate consequences.”
What People Are Saying
Taylor Rogers, a spokesperson for the Trump-Vance transition team, previously told Newsweek in a statement: “President Trump will deliver on his promise to Make Housing Affordable Again by defeating historic inflation and reducing mortgage rates.
“President Trump will ban mortgages for illegal immigrants who drive up the price of housing, eliminate federal regulations driving up housing costs, open portions of federal land with ultra-low taxes and regulations for large-scale housing construction. The cost of new homes will be cut in half, and President Trump will end the housing affordability crisis.”
What Happens Next
Several housing experts have told Newsweek that Trump’s planned policies to improve affordability in the housing market and expand inventory could have both beneficial and detrimental impacts.
While slashing regulations and opening up federal land, two initiatives that Trump mentioned in his agenda, could help increase supply, other policies—like imposing tariffs on Canada and deporting immigrants en masse—could increase building costs and leave the construction sectors without crucial workers.