Housing experts have warned that President Donald Trump’s plans to impose a 5% tariff on imported Mexican goods could have a negative impact on the real estate market, leading to higher home prices and more expensive household goods.
For example, they say newly-built homes would become more expensive as building materials will cost more, CNBC reported.
Around 11% of U.S. steel imports come by way of Mexico, according to data from the International Trade Administration. Steel is an important building material that’s used in both residential and commercial construction, and is also vital for home renovations. Another material that will be affected is cement, with Mexico being the fifth largest supplier to the U.S.
Trump imposed the tariffs on Mexico in order to persuade it to do more to prevent illegal immigrants from entering the country through its borders. If Mexico fails to take action, the tariffs will increase by 5% each month until October. At that stage, the total tariff would be 25% on Mexican goods.
On June 10th, the United States will impose a 5% Tariff on all goods coming into our Country from Mexico, until such time as illegal migrants coming through Mexico, and into our Country, STOP. The Tariff will gradually increase until the Illegal Immigration problem is remedied,..— Donald J. Trump (@realDonaldTrump) May 30, 2019
But CNCB cites experts as saying that any increase in the costs of building materials will likely just be passed on to consumers, therefore increasing home prices.
The tariffs are significant because the U.S. imported $346 billion worth of Mexican goods in 2018 alone, University of Michigan economists told CNBC.