Will Trump Hold Back on Tariffs? What It Means for Mortgage Rates & Real Estate

Trade policy may seem far removed from real estate, but when it comes to tariffs, the ripple effects can impact everything from mortgage rates to home affordability. CIBC highlights four key reasons why President Trump might limit new tariffs, and each of them ties back to the broader economy—including housing.

1. Stock Market Reactions 

Trump closely watches the stock market, often using it as a measure of his success. When markets reacted negatively to previous tariff announcements, his administration quickly granted temporary exemptions (like Canada and Mexico’s 30-day reprieve on steel and aluminum tariffs). If new tariffs cause another selloff, he may soften his stance to stabilize investor confidence.

2. Rising Gas Prices

Tariffs on Canadian energy imports would likely push up gas prices—something Trump would want to avoid. Unlike other goods, there’s no quick alternative to Canadian oil, meaning higher costs would hit consumers immediately. More expensive fuel increases transportation and construction costs, which could lead to rising home prices.

3. Inflation Pressures

Broadly applied tariffs mean higher prices on imported goods, driving up inflation. Since Trump often criticizes inflation in campaign speeches, he’ll be hesitant to introduce policies that make it worse. Higher inflation could also push the Federal Reserve to keep interest rates elevated—bad news for mortgage borrowers hoping for lower payments.

4. Timing & Political Risk 

The negative effects of tariffs—rising prices, job losses, and economic uncertainty—would be felt quickly, while any benefits (such as bringing manufacturing jobs back) take much longer to materialize. With elections on the horizon, Trump may avoid policies that create immediate financial pain for voters.

What This Means for Mortgage Rates & Housing 

If new tariffs push inflation higher, the Bank of Canada and the Federal Reserve may be forced to keep rates elevated, making borrowing more expensive. But doesn't necessarioy mean you can take advantage of negotiating the price of your new home or real estate investment.

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