How could Trump’s tariffs affect mortgage rates in US? Experts weigh in

Trump’s latest trade policy plan includes a sweeping 10 per cent global tariff on all imported goods, alongside steeper duties targeting specific countries, such as a 35 per cent tariff on Chinese products and 24 per cent on imports from Japan.

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One of the biggest concerns: The potential effect on mortgage rates

Elevated borrowing costs have already put pressure on the housing market, and analysts say the tariffs could drive rates even higher. “The Fed matters, but it’s not the only player in the game. The bond market moves on inflation, economic data and global events like tariffs or political uncertainty,” said Nicole Rueth, senior vice president at Movement Mortgage, in an interview with CNET.

“Buyers waiting for 3 per cent rates again are wasting time. Those days are gone.”

However, Danielle Hale, chief economist at Realtor.com, assures Newsweek, “I don’t think that the inflationary impact from tariffs will be the bigger factor for interest rates.”

With core inflation currently at 2.8 per cent, Redfin housing economist Chen Zhao predicts it could rise to 3.5 to 4 per cent by the end of the year due to the new import taxes. “Whether rates fall or rise depends on whether this bout of inflation is temporary,” Zhao wrote in a Redfin blog post.

Higher inflation would complicate the Federal Reserve’s ability to make aggressive rate cuts, even though the Fed is expected to begin cutting rates in June. “Higher prices, slower economic growth, higher unemployment and higher construction costs,” Zhao warned.

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Trump’s tariffs under fire as housing market slows

Notably, a large portion of building materials like lumber, drywall, and home appliances are imported. With many of these goods falling under the new tariff regime, builders may pass the increased costs on to buyers, making new homes even more expensive.

“However, when the higher costs of goods start to push up the rate of inflation, it is quite possible that rates will go back up. I expect to be on a mortgage rate roller coaster for the next few months,” Melissa Cohn, regional vice president of William Raveis Mortgage, told Newsweek.

CBS News‘ March poll shows that fewer than 25 percent of Americans believe Trump’s policies have improved their financial situation, while nearly twice as many say his policies have made their finances worse.

“Mortgage rates have slowed the housing market to a crawl. It’s not just the rates; it’s the combination of high home values and high interest rates. If home prices were lower, maybe buyers could handle the higher rates. But when both are elevated, it’s a recipe for disaster. Trump’s tariffs only add fuel to the fire,” Kevin Thompson, the CEO of 9i Capital, told Newsweek.