Declaring it a “Liberation Day” for American workers, President Donald Trump on Wednesday announced sweeping new tariffs that could impact home prices and mortgage rates.
“Our country and its taxpayers have been ripped off for more than 50 years, but it is not going to happen anymore,” Trump said in remarks at the White House’s Rose Garden. “With today’s action, we are finally going to be able to make America great again, greater than ever before.”
The new tariffs, effective at midnight, include a 10% baseline tax on all imports, with proportionally higher levies on goods from countries that impose additional tariffs on U.S. goods. All imported vehicles will also face a 25% import tax, he said.
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Tariffs, which are taxes on imported goods, are typically paid to the government by the local business importing those goods. In most cases, the cost is passed along to consumers in the form of higher prices.
Trump has said that his goal with the new tariffs is to level the playing field for American-made products and spur a renaissance for U.S. manufacturing. But some economists fear the new trade barriers could raise the cost of everyday goods and disrupt complex global supply chains.
For the housing market, the new tariffs could mean higher construction costs for homebuilders, to the extent that they impact the imported materials used in home construction.
The National Association of Home Builders (NAHB) estimates that about 10% of of building materials used in residential construction are imported, including a significant share of dimensional lumber sourced from Canada.
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“The US faces a supply gap of nearly 4 million homes, and the only long-term solution to this problem is to build them, but the implementation of these tariffs will make it more costly to do so, putting a question mark on whether they can be built at the lower price points that are most undersupplied,” says Realtor.com® Senior Economist Joel Berner.
“Homebuyers are already stretched thin by high listing prices and mortgage rates, so even this relatively small increase in cost will keep many of them on the sideline who may have otherwise become buyers in 2025,” he adds.
Tariffs could also impact mortgage rates, if they keep inflation higher for longer as many economist fear they will.
Prolonged inflation would prompt the Fed to reduce or reverse future cuts to its policy rate, which all else equal would keep mortgage rates higher for longer.
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