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Trump’s tariffs: how will they impact Australia’s property market?

ByAndrew Mirams

US President Donald Trump’s tariffs have resulted in a global trade war complete with “tit-for-tat” tariff responses from some major trading partners. This is an issue expected to affect everyday Australians, including homeowners and buyers.

With our country already struggling with cost-of-living pressures and high house prices, it’s not good news.

Trump’s tariffs: why they began

Firstly, to explain: tariffs are taxes on imported goods, with the importing government (in this case, the US) collecting these taxes from the company importing such goods, usually via a national customs agency (in this case, the US Customs and Border Protection).

In President Trump’s February 1 “Fact Sheet”, he explained the tariffs were necessary because of the “extraordinary threat posed by illegal aliens and drugs (which) constitutes a national emergency”.

The president announced he was keeping his promise to voters that he would “seal the borders (to) one of the most open economies in the world (with) the lowest average tariff rates in the world”.

“Trade policy is a critical component in national security,” he said.

Trump’s tariffs: how and when they began

The US tariff saga began on 1 February after President Trump announced that Canadian, Mexican and Chinese imports to the US would face 10% to 25% tariffs.

Trump’s tariffs amount to 25% duties on Canadian and Mexican imports, plus 10% duties on Canadian energy resources.

Chinese imports initially faced 10% additional tariffs, which were later increased to 20%.

The tariffs were due to begin on 4 February for Canada and Mexico but were delayed to 4 March to enable further negotiations, which did not end well (see below).

In an extra tariff blow, 25% tariffs on all steel and aluminium imports to the US began on 12 March.

This includes Australian imports after Trump rejected an exemption plan from Prime Minister Anthony Albanese.

Australia’s billion-dollar meat and pharmaceutical export sectors, and others, are also expected to be hit hard by Trump’s tariff plans.

Trump’s tariffs: “Tit-for-Tat” global trade retaliations

The extra month of negotiations between the US, Canada and Mexico triggered an angry wave of “retaliatory” tariff from the latter two countries.

Canada has now placed a 25% retaliatory tariff on some US goods; China has imposed 10% to 15% tariffs on US imports of coal, liquefied natural gas, crude oil, and agricultural machinery; and Mexico has followed in these countries’ footsteps.

The trade war hasn’t stopped there with the EU announcing it would hit the US’ whisky industry with a 50% tariff, following the president’s steel and aluminium tariff announcement.

As a result, President Trump threatened to hit the EU with a 200% duty on all European wine and other alcohol imports.

So far, Australia is determined to steer clear of reciprocal tariffs on the US despite the president’s steel and aluminium exemption decision.

Trump’s tariffs: how they will impact Australia’s property market

  • Construction industry:

    Only 10% of Australia’s total steel and aluminium production, or less than 0.2% of the total value of our exports, is sent to the US.

    Therefore, the direct impact of President Trump’s 25% tariff hit on local producers, including the construction industry, should be small.

    However, the tariffs’ ripple effects could leave our already struggling construction industry – and with it, the property market – in a bind we don’t need.

    For a start, Trump’s tariffs are already resulting in general international uncertainty and instability, with global supply chain disruptions expected to follow.

    Construction projects could also be cancelled or delayed, and in a country already suffering from a housing shortage, this is not good news.

    In other possible tariff outcomes, countries keen to avoid paying the US tariffs, such as China, may export more and cheaper steel and aluminium to Australia.

    This may spark additional anti-dumping measures to protect local producers.

    Alternatively, these same producers could export steel and aluminium to other – likely Asian – markets, rather than pay the US tariffs.

    Or, these producers may bite the bullet and continue exporting to the US with the 25% tariff likely being passed onto consumers.

    In a final possible scenario, Australian producers – and consumers – may find that as the appeal of US exports flatlines, more steel is available in our country at a cheaper price than before the tariff announcements.

  • Property market:

    Tariffs generally result in higher consumer costs and increased consumer uncertainty as well as higher inflation figures, which in turn leads to higher interest rates. Certainly, if the Australian government decides to implement retaliatory tariffs, the outcome wouldn’t be great for our property markets.

    Buyers in Australia are sensitive to shifts in interest rates, so anything that delays expected cuts won’t be welcome. This is particularly concerning given the RBA’s first rate cut since 2020, in February.

    Trade wars also feed into economic uncertainty for buyers. Our property markets trade on confidence. If potential buyers are shaken because they’re worried about their job prospects or the ability to maintain wealth, it can reduce activity in the property market.

    Tariff impacts on the construction industry could also push house prices up. While it remains to be seen how far these trade disputes will extend, anything that increases building costs—whether through higher shipping fees or taxation—will flow through to consumers. If tariffs take hold, don’t be surprised to see less new housing as developer margins are squeezed further. The net result is higher house prices and tighter rental markets. Of course, we’ll need to wait and see whether the tariff trade war escalates further to understand the full extent.

Trump’s tariffs: will share market swings impact property markets?

This depends on whether you believe there is a direct correlation between the two markets!

Certainly, interest rates and inflation figures impact both sectors. 

Following Trump’s initial tariff announcement on 1 February, the Australian Stock Exchange (ASX) experienced its sharpest decline since September 2024 while the S&P/ASX 200 experienced its worst month in two years.

Worse was to come with the ASX losing $50 billion over two days at the start of Trump’s steel and aluminium tariffs on 11 and 12 March.

Trump’s initial 3 February tariff announcement also resulted in a weakened Australian dollar, which dropped nearly one cent to 62 US cents.

Despite these numbers, Shane Oliver, Head of Investment Strategy and Chief Economist at AMP, believes Australian shares have shown “relative resilience” to Trump’s ongoing tariff war; however, such resilience also “risks emboldening Trump to do even more,” he said.

Trump’s tariffs: what’s next for Australia?

As earlier noted, Australia is determined to hold steady on retaliatory US tariffs, which is a good start.

However, it’s still anyone’s guess as to what may happen next as major countries including the US and EU play a tit-for-tat game of changing tariffs.

Australian home buyers, owners and builders should not expect the issue to go away simply or cheaply.

Fortunately, you can rely on experienced mortgage broker for smart advice, so if Trump’s tariffs are keeping you awake at night, contact Intuitive Finance for expert support.

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Andrew Mirams
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