“Liberation Day” Tariffs To Send Shockwaves Through The Economy

Donald Trump’s sweeping “Liberation Day” tariff decree sent shockwaves through Wall Street as analysts balked at the breadth and intensity of the move.

Trump declared a national emergency and set a minimum of 10% tariffs on virtually all products from every country, with the “worst offenders” seeing even higher rates. China’s burden is now up to 54%.

Imported cars, in particular, will see a 25% tariffs.

“This will be an entirely different country in a short period of time,” Trump said in a speech in the Rose Garden. “It’ll be something, the whole world will be talking about it.”

Stock futures tanked in response to the news. Dan Ives, senior analyst at Wedbush Securities, characterized the move as “worse than the worst case scenario” in a note.

For the housing market, the biggest pain might come from elevated inflation and building costs, keeping potential buyers restrained.

During the last round of tariff sparring between the U.S., Canada, and Mexico, experts estimated the price to build a single-family home would soar by $7,500 to $10,000. Builder confidence tumbled to a seven-month low in response.

According to the National Association of Homebuilders (NAHB), $204 billion worth of goods were used in the construction of both new multifamily and single-family housing in 2024.

$14 billion of those goods were imported from outside the United States, meaning approximately 7% of all goods used in new residential construction originate from a foreign nation.

“There isn’t a room in a newly constructed home that will not be affected by these tariffs,” Jim Tobin, president and CEO of NAHB, told Politico.

Americans might also find it hard to save for a down payment if the tariffs kick off severe inflation.

Tariffs don’t always lead to broad price increases, a fact that the import taxes levied during Trump’s first term prove.

But analysts note that an order this sweeping hasn’t been seen since the 1930s, when the infamous Smoot-Hawley tariffs led to a destructive global trade war.

“This could be a major rewiring of the domestic economy and of the global economy, a la Thatcher, a la Reagan, where you get a more enabled private sector, streamlined government, a fair trading system,” Mohamed El-Erian, Allianz’s chief economic advisor, told CNBC.

“Alternatively, if we get tit-for-tat tariffs, we slip into stagflation, and that stagflation becomes well anchored, and that becomes problematic.”

Mortgage rates could either rise or fall as a result of the news, depending on how inflation fares.

But homebuyers are likely to face increased prices regardless of rates movements.

“Homebuyers are already stretched thin by high listing prices and mortgage rates, so even this relatively small increase in cost will keep many of them on the sideline who may have otherwise become buyers in 2025,” Realtor.com Senior Economist Joel Berner said.