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On Sat., Feb. 1, President Donald Trump imposed previously promised tariffs, implementing a 25% tax on imported goods from Mexico and most from Canada (energy related goods are only 10%) and an additional 10% tax on imported goods from China.
Tariffs could impact the housing market in a few crucial ways. For one, prices on homebuilding materials (such as Canadian lumber) would increase, making homebuilding and, in turn, homebuying more expensive as builders pass the burden of increased costs onto consumers. Moreover, the general increase on consumer goods prices would drive inflation higher, cutting into potential buyers’ pocketbooks and driving mortgage rates higher as the Federal Reserve holds back on cutting interest rates.
However, after meetings with Mexican President Claudia Sheinbaum and then Canadian Prime Minister Justin Trudeau on Mon., Feb. 3, Trump agreed to delay the tariffs on Mexico and Canada (which has threatened retaliatory tariffs on American goods) for at least one month.
The sentiment of uncertainty—both in the tariffs’ implementation and their impact on the housing sector—echoed in a response to RISMedia by National Association of REALTORS® (NAR) Chief Economist Lawrence Yun. Yun said it is “difficult to predict all possible outcomes” but did not take an alarmist stance, instead weighing possible impacts of the tariffs.