Written by David Dodge  

These days, you might hear a lot about tariffs on the news. Tariffs are like extra taxes the government puts on things we buy from other countries, like clothes, appliances, or building materials. They’re making a big splash, and they can affect the housing market, which is important for real estate agents to understand. Even if you’re not a real estate expert, this guide will explain tariffs in a simple way and show why they matter for people buying or selling homes. We’ll also share five easy-to-understand reasons why real estate agents need to pay attention to tariffs.

What Are Tariffs?

A tariff is a tax that businesses pay when they bring products into the United States from other countries. For example, imagine a store buys a lamp from another country for $50. With a 10% tariff, the store has to pay an extra $5 to the U.S. government, so the lamp now costs them $55. Most of the time, stores raise the price for customers to cover this extra cost, so we all end up paying a bit more.

Right now, in early 2025, the U.S. has a 10% tariff on most things coming into the country. Some countries have different rules, but this tax is making things more expensive.

Why Do We Have Tariffs?

The government, especially the president, uses tariffs to try to help American businesses. The idea is to make things from other countries more expensive, so people will buy more products made in the U.S. For example, in January 2025, the U.S. bought $317 billion worth of stuff from other countries but only sold $164 billion worth of American goods to them. That gap is called a trade deficit, and tariffs are supposed to help shrink it by encouraging companies to make things here.

But there’s a catch: the U.S. doesn’t always have enough factories or workers to make everything we need right away. So, when tariffs make things more expensive, it’s often regular people, like you and me, who end up paying more.

Who Decides on Tariffs?

Usually, Congress makes decisions about taxes, but tariffs are a bit different. A long time ago, in 1930, a law called the Smoot-Hawley Act caused big problems by starting trade fights with other countries, which hurt the economy. After that, Congress gave the president more power to set tariffs, especially if they’re needed for national security. So, the president can raise or lower tariffs without asking Congress.

Why Should Real Estate Agents Care?

You might wonder why tariffs matter for real estate agents since houses are built and sold right here in the U.S. But tariffs can make it harder to buy, sell, or build homes. Younger people, like millennials (born between 1981 and 1996), are a big group buying homes, and many of them (about 61%) are worried about housing costs. They feel policies like tariffs are making it tougher to afford a home. Here are five simple reasons why real estate agents need to keep an eye on tariffs.

1. Building New Homes Costs More

Tariffs make things like lumber, steel, or bricks from other countries more expensive. When it costs more to build a house, fewer new homes get built. In early 2025, we’re already seeing fewer new homes being started—down by a lot compared to last year. If fewer homes are built, there are fewer homes for people to buy, which can mean fewer sales for real estate agents.

2. Fixing Up Homes Is Pricier

If someone wants to fix up their home to sell it—like adding a new kitchen or bathroom—tariffs can make things like sinks, tiles, or appliances more expensive. This means it costs more to get a home ready for sale. Some sellers might skip these upgrades, which could make their home less appealing, so it sits on the market longer. That’s not good for agents trying to make sales.

3. Mortgage Rates Are Up and Down

Mortgages are loans people take to buy homes, and the interest rate is how much extra they pay to borrow that money. A few years ago, rates were super low, like 2-3%. Now, in 2025, they’re higher, around 6-7%. Tariffs can make people nervous about the economy, which might keep these rates high. Higher rates mean it’s harder for people to afford homes, so fewer people buy, and agents have fewer clients.

Plus, some homeowners who got low rates years ago don’t want to sell because buying a new home would mean a higher rate and bigger monthly payments.

4. People Are Worried About Money

When prices go up because of tariffs, people get nervous. They might decide not to buy a home because they’re worried about spending too much. This means fewer people are looking to buy homes, so real estate agents have to work harder to find clients. Buyers might also try to negotiate lower prices, which can mean smaller paychecks for agents.

5. Delays in Getting Supplies

Tariffs can mess up the supply of things needed to build or fix homes, like windows or heating systems. We saw this during the pandemic when it was hard to get supplies, and it’s happening again with tariffs. These delays can slow down home building or repairs, which means fewer homes are ready to sell. This can make it tougher for agents to close deals.

How Real Estate Agents Can Help

If you’re a real estate agent, the best way to help your clients during this time is to stay calm and learn as much as you can about tariffs and the economy. By understanding how tariffs affect home prices, building costs, and buyer confidence, you can explain things clearly to your clients. This makes you look like an expert they can trust, which can lead to more sales and happy customers who recommend you to others.

For example, you might tell a client, “Building supplies are a bit more expensive now because of tariffs, but we can find a home that’s already in great shape to save you money.” Or, “Let’s be patient and look for the best deal since some buyers are waiting for lower interest rates.”

Final Thoughts

Tariffs might seem like something far away from buying or selling homes, but they can make a big difference in the housing market. By staying informed, real estate agents can guide their clients through these changes, answer their questions, and help them feel confident about their decisions. Whether you’re an agent or someone thinking about buying or selling a home, understanding tariffs can help you make smarter choices in 2025.