- We Still Don’t Know What We Don’t Know Since The Tariffs Are Not An Economic Strategy
- Tariffs Are Inflationary Because They Are A Tax On The American Consumer
- This Ship Has Sailed: Shift To Manufacturing As US Economic Driver
Every day, I endeavor to write about the nuances of the housing market. However, with the tariff tantrums coming out of Washington, DC, on an hourly basis, it is the only topic that matters right now. We don’t know anything because the administration doesn’t seem to understand its policy. The messaging behind the tariffs is that the administration wants to bring manufacturing back to the US. The explanation appears bizarre unless the consumer wants $10,000 iPhones and employees wish to have $3 per day wages. Financial markets don’t like tariffs, and their recent implementation will choke off capital from US markets (hint: investment). The US doesn’t have enough workers in this “new economy.” The following comment about the lack of strategy and seeming randomness of their implementation says it all:
Many of my friends and colleagues are starting to believe the conspiracy theory that this is an eight-dimensional chess strategy to lower interest rates when the trillions of national debt are up for refinancing this year. I don’t think there is any such thing going on; instead, it’s a face-saving explanation for the sharp correction and chaos of the financial markets.
The 10-year treasury is rising today which means higher mortgage rates as they heavily influence their direction. Mortgage rates are rising today.
Dr. Justin Wolfers, a professor of economics and public policy at the University of Michigan who is sporting a much better haircut these days, wrote a sobering NYT op-ed, “Your Life Will Never Be the Same After These Tariffs” (gift link included). Click on the image to watch his excellent explainer interview.
Odds Are We’re In A Recession Already
Larry Fink, CEO of Black Rock said that we are already in a recession after talking to many CEOs. He concludes that the economy is weakening as inflation is elevated and doesn’t think the Fed will be able to cut rates multiple times (7-day gift link) in 2025. Layoffs are surging.
Ken Griffen of Citadel calls this tariff strategy a huge mistake. The shift to a manufacturing economy will take decades.
Small business owners who tend to be conservative, view this tariff situation as causing one of the most uncertain business environments ever tracked.
Burning Down The House
Mortgage rates are probably going to rise in the near-term because of the fear of the randomness (higher risk) and lack of apparent strategy in the global tariff implementation.
I’ve been calling this tariff rollout “the beginning of a new era of dumbness” because of the lack of understanding of what a tariff actually is. “A tariff is a tax on the American consumer.” Tariff policy appears to have been conceived in a misinformation silo. Financial market volatility is the main issue here, not whether the markets go up or down on a particular day. Companies are unable to forecast or project their businesses at the moment. That alone will drag down the economy.
Final Thoughts
As so many of us are on the edge of our economic seats, wondering what new economic trauma we will face each day, it is easy to overreact. If the tariff tantrums continue for weeks and months, the odds are that we may go into a recession, which would mean a lot of job loss and a modest decline in mortgage rates. Investors may shift from the financial markets to the hard assets in the housing market, but who knows at this point? It is too soon to understand the chaos. I say “modest decline” in rates as we know tariffs are inflationary because they are a tax on the American consumer (I need to keep repeating this). On an anecdotal level of the housing market, I do not hear about prices correcting, listing inventory surging, or sellers de-listing. Of course, actions like that happen on the margin all the time. What’s different this time is no pattern, precedent, or strategy conveyed to the public about tariffs, and that’s what brings the overwhelming uncertainty front and center. For now, I’m sitting still to watch the theatre play out.
The Actual Final Thought – Tariffs on imports make prices rise.
Monday Tuesday Mailboxes, Etc. – Sharing reader feedback on Housing Notes.
April 4, 2025: Liberation Day: Tariff Tantrums May Stall The Housing Market
- Are you going to the parade?
- You are so right in calling this ‘bizarre’. Having run numerous businesses (casinos, airlines, commercial products) into the ground, DJT seems hell-bent on cratering the US economy — and real estate markets along with it. Keep making your voice heard!
- Hello – SO appreciate your perspective and thanks for keeping this going. It is staggering and appalling. The whole world is laughing at us for sure.
- Trump was told to do what he is doing so as to bring down America even more quickly than past efforts had done. Notice the quiet stillness from the Global Elite.
- Nice job Jonathan.
Did you miss the previous Housing Notes?
Housing Notes Reads
- Expect a ‘mortgage rate roller coaster’ following new tariffs [Real Estate News]
- Trump’s Tariff Tantrum: How Sweeping Tariffs Came to Be and Why It Matters [Roosevelt Institute]
- China is retaliating [CNBC]
- JPMorgan Sees Global Recession Odds at 60% If Tariffs Sustained [Bloomberg]
- Sweeping U.S. Tariffs Trigger Global Outrage [Foreign Policy]
Market Reports
- Elliman Report: Florida New Signed Contracts 3-2025 [Miller Samuel]
- Elliman Report: New York New Signed Contracts 3-2025 [Miller Samuel]
- Elliman Report: Manhattan Sales 1Q 2025 [Miller Samuel]
