proestate.id – In early April 2025, President Donald Trump announced a series of new tariffs affecting global trade, creating shockwaves in the global financial markets, including the real estate sector.
The tariff policy announced on April 2, 2025 includes broad tariffs on imports from major countries such as Mexico, Canada, and China, as well as certain goods from the UK.
This decision not only changes the course of the global economy but also triggers uncertainty in the property and construction markets worldwide.
Since the announcement of these tariffs, global stock markets have experienced extreme volatility, with the S&P 500 dropping more than 12% in four consecutive trading sessions.
Stock prices lost more than $10 trillion, while concerns about a global recession have risen, with global recession odds increasing to 60%.
The effects of this policy have been clearly visible across global property sectors, with a shift in investment from the US to European and Asian markets due to the uncertainties caused by this tariff policy.
Trump’s 2025 Tariff Policy: Summary and Economic Implications
On April 2, 2025, President Trump announced tariffs that include:
- 25% tariff on goods from Mexico and Canada, including construction materials from these countries.
- Additional 10% tariff on imports from China, the third-largest trading partner of the US.
- 25% tariff on steel and aluminum imports, and 54% tariff on imports from China.
- 10% tariff on all goods imported from the UK.
This announcement has led to trade tensions, prompting retaliatory actions from affected countries, with China immediately announcing a 34% additional tariff on some US products.
In the short term, these tariffs are expected to slow global economic growth, raise inflation, and directly impact global real estate markets.
Economists agree that these tariffs will add household costs by approximately $1,200 per year for typical US households.
Global Impact on the Real Estate Sector
Trump’s tariff policy in 2025 has had a profound impact on the global real estate sector. Several noticeable changes include the shift in investments from the US to Europe and Asia. The US real estate sector, previously a primary investment destination, now faces uncertainty surrounding asset values and unpredictable fiscal policies.
Bank of America surveys show a significant decline in US stock ownership since December 2024, with over 90% of investors feeling that US equities are overpriced.
In contrast, European equities have seen the largest increase in fund allocations in one month in the past 25 years, signaling renewed investor confidence in the region.
Market Volatility and Investment Reallocation
The stock market, shaken by Trump’s tariffs, has also had a major impact on the real estate sector. Gold prices, which have surged to a record high nearing $3,000 per ounce, reflect the economic uncertainty that is influencing asset valuations and investment strategies.
Investors are increasingly seeking safe havens in response to global trade war concerns and geopolitical tensions, with European and Asian real estate becoming more attractive.
Regional Property Market Impact
United States: Pressures on Buyers and Developers
The US property market is facing significant pressure from rising construction costs and high mortgage rates. Despite the tariff exemption on Canadian lumber, wood prices have risen 14.5% due to previous policies.
In Raleigh, North Carolina, developers report a 7% increase in material costs for new homes, with average property prices projected to increase by $9,200. However, some prospective buyers remain optimistic due to limited inventory and steady demand.
Bankrate notes that the tariffs could also increase mortgage rates if inflation continues to rise, exacerbating housing affordability. NAHB reports a decline in developer confidence to a seven-month low, signaling a slowdown in new projects.
Europe: Recovery Disrupted
The real estate sector in the UK and Europe showed signs of recovery in late 2024, with inflation nearing target and accommodative monetary policies. However, Trump’s new tariffs on UK imports are likely to disrupt this recovery.
The US is the second-largest export market for UK construction materials, and the 10% tariff on UK imports will significantly affect the construction sector in the UK.
However, despite these challenges, several European countries, such as Germany, are attracting investors with looser fiscal policies and forecasts for economic recovery.
Asia: Stable Growth
In Asia, while some countries face tensions from US tariff policies, countries like China and India continue to show stable growth.
China, with its domestic stimulus policies, is able to mitigate the impact of Trump’s tariffs, and the real estate sector in the country is expected to remain robust amid global uncertainties.
Impact on the Construction Sector
The global construction sector is facing major challenges due to Trump’s tariff policy, which raises material costs and disrupts global supply chains.
The 25% tariff on steel and aluminum, along with 10% tariffs on all imports from the UK, is expected to increase construction material costs and disrupt the supply chain, impacting major projects worldwide.
Rising Material Costs
Trump’s tariff policy has directly impacted construction material costs. In the US, construction material costs have risen by 9% in early 2025, with a 41% total increase since February 2020.
The National Association of Home Builders (NAHB) estimates that the average construction cost per home will increase by $9,200, primarily for imported materials like Canadian wood.
Market Response and Adaptation Strategies
Shifting to Domestic Materials
To avoid the impact of tariffs, US developers are turning to domestic materials for construction, though this affects the costs and quality of materials used.
Developers are also increasingly relying on construction technology and digital supply chain management to reduce dependence on imported materials.
Impact on Commercial Property
The commercial property sector faces unique challenges. The increase in tariffs reduces consumer purchasing power, which affects the demand for retail space.
However, the logistics and warehousing sector continues to grow as many companies shift their investments into storage and inventory facilities to anticipate trade disruptions caused by the tariffs.
Projections and Conclusion
Global Property Price Projections
Although Trump’s tariffs bring negative impacts to many global property markets, real estate sectors in Asia and Europe may experience recovery due to greater investment flows in these regions.
In the US, property prices are expected to rise by 3-5% in 2025 due to increased construction costs and inflation.
Recommendations
- Diversify Material Sources: Developers need to build relationships with suppliers from various countries to reduce dependence on one source.
- Invest in Technology: Using modern construction technology can help reduce reliance on imported materials and optimize project efficiency.
- Long-Term Planning: Investors and developers must factor in the long-term risks of these tariff policies and develop strategies that can withstand global uncertainties.
In conclusion, Trump’s 2025 tariff policy has created a complex dynamic in the global real estate market.
While some markets may experience slowdowns or declines due to lower demand and higher costs, others may see an increase in investment due to the shift of capital from the US.
Global economic fundamentals such as interest rates, inflation, fiscal policies, and market valuations play a crucial role in shaping real estate investment decisions and relocation strategies. Despite these challenges, there are opportunities for resilience and adaptation in the global real estate sector.
A holistic approach to risk from tariffs will enhance overall resilience to geopolitical events. By understanding the underlying economic factors and market dynamics, stakeholders can develop strategies that are robust against political and economic fluctuations.
