On April 2, 2025, President Donald Trump declared “Liberation Day” for American workers, unveiling sweeping new tariffs that could influence U.S. home prices and mortgage rates.
“For over 50 years, our country and its taxpayers have been taken advantage of, but that ends today,” Trump announced from the White House Rose Garden. “With these actions, we will make America greater than ever before.”
The new “reciprocal” tariffs, effective at midnight, impose a baseline 10% tax on most trading partners, with higher levies on goods from countries that impose tariffs on U.S. exports. Additionally, all imported vehicles will now face a 25% import tax.
Impact on Housing and Construction
The tariffs could raise construction costs for homebuilders, depending on their effect on imported materials. The National Association of Home Builders (NAHB) notes that roughly 10% of materials used in residential construction are imported.
According to NAHB, 72% of imported lumber comes from Canada, while 74% of imported gypsum–used in drywall–comes from Mexico. However, NAHB Chairman Buddy Hughes acknowledged that Trump’s exemptions for Canadian and Mexican construction materials, including lumber, could mitigate some of the potential cost increases. “NAHB appreciates the administration’s recognition of critical housing inputs and will continue working to expand domestic lumber production and reduce regulatory burdens,” Hughes stated.
Potential Effect on Mortgage Rates
Some economists warn that long-term tariffs could fuel inflation, potentially keeping mortgage rates elevated. If inflation remains stubbornly high, the Federal Reserve may delay or even reverse expected rate cuts, which could prolong higher borrowing costs.
Since late October 2024, the average 30-year fixed mortgage rate has stayed above 6.6%, partly due to persistent inflation. This remains well above Trump’s campaign promise to lower mortgage rates to 3% or below — though presidents typically have no direct control over such rates. Trump has emphasized reducing long-term government bond yields, which influence mortgage rates, through deficit reduction, lower inflation, or slower economic growth.
Long Term Effects
Tariffs are often presented as temporary measures for economic or strategic leverage, yet history shows they frequently remain in place longer than anticipated. President Trump has long regarded tariffs as a key economic tool, making it unlikely that he would remove them without securing significant trade concessions. Any rollback would likely be part of a negotiated agreement, a process that could take months or even years, depending on the economic conditions of each country involved.
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