Thoughts on Tariffs (Not Politics)

Breaking Down the Tariff Chaos: What It Means for Real Estate and Interest Rates

Disclaimer: I don’t do politics. I know it’s important, and I know a lot of people are passionate about it. I’m not. But I do study the economy, so this post is simply an exploration of the possible effects of tariffs. Please treat each other (and me) with grace and kindness in the comments. Thanks. :)

Now that we’ve got that out of the way, let’s unpack the tariff situation and what it could mean specifically for residential real estate. I’ve spent most of the day thinking about this, trying to take as much emotion out of it as possible and look at it purely through a fact-based lens.

To me, this breaks down into three distinct parts: headlines/Trump’s negotiation tactics, inflation, and the stock market. I’ll go through all three. But let’s be clear, this is an insanely complicated situation with a ton of moving pieces, and we’re in the first hours of it all popping off. This post could be as obsolete by tomorrow.

Headlines: Posturing or Reality?

How much of this is actual policy, and how much is just negotiation theater? Are we really about to get into a trade war with two allies and China at the same time? Anything is possible, but if we apply some Spock-style logic, looking at past behavior as an indicator of future actions is as good an approach as any.

Yes, the tariffs have been announced and will be enforced, but for how long? A day? A week? A month? Forever? Last time Trump was president, there were a lot of tariff threats, some were actually implemented, and there was a whole lot of noise about additional ones. But when the dust settled, it seemed (not an economist, just a guy who pays attention) like it was mostly a non-event for the economy. The strategy back then was to use tariffs as leverage in trade negotiations.

My gut says that’s what’s happening again. I heard an interview where someone said, "You should always take Trump very seriously, but you shouldn’t take him literally." That stuck with me. Yes, he has literally enacted tariffs, just like he did before. And yes, he is serious about trade with Canada, Mexico, and China. Makes sense that these are the three countries making headlines.

Bottom line: Try to look past the noise and focus on what’s really happening. This feels like positioning for negotiations, just like last time. But honestly… no one knows what’s inside another person’s mind.

Inflation: The Real Estate Killer

Tariffs are inflationary. Period. And inflation is the last thing we need in real estate because when inflation is high, the Fed raises rates (or, at best, doesn’t cut them). We’ve all been living through that fun experience the last couple of years.

Not to get too technical, but tariffs also mess with bond yields. Without turning this into a long, sleep-inducing bond market explainer, just know that more risk means investors expect a bigger return. And since tariffs, inflation, and all the surrounding uncertainty increase risk, investors will demand higher yields. Translation: Expect a bad week for mortgage rates.

The widening spread will put even more pressure on rates in the short term, which…surprise, surprise, is bad for the housing sector.

Stock Market: Watching the Fallout

I waited to write this part because I wanted to see what the futures markets would do. My bet? They’d drop. The question was: By how much?

Most major indexes moved between 1–2%, which is a pretty big swing. The Dow dropped as much as 450 points at one point.

Normally, when the stock market takes a hit, interest rates eventually come down. When markets and the broader economy stumble, the Fed starts talking about rate cuts again. If things get bad enough, yields could compress, giving us some short-term relief on mortgage rates.

Could this be the moment when the labor market finally cracks and we see some real downward pressure on rates? Maybe. But it’s too early to say for sure. It’s just too early, and there are too many moving parts. Near-term, this is bad for real estate, but that doesn’t mean it’s bad for the country or the economy as a whole. I truly believe this is more of a negotiation tactic than a long-term strategy.

Hope this helps give some context to all the chaos. Would love to hear your economic thoughts, drop them in the comments.