Today we’re diving into a topic that’s top of mind for many residential real estate investors and in general, for any investor in the US. The impact of the 2025 tariffs and what they mean for your investing strategy.
So, what are we really dealing with here? In April 2025, the United States rolled out sweeping new import tariffs: a 10% base rate on all imports (now temporarily paused), plus even higher tariffs on countries like Canada, Mexico, and China. We are talking 25% on certain Canadian and Mexican goods, and more than 140% on Chinese imports in some cases. It did not take long for global partners to retaliate, and growth forecasts are already being revised downward.
The broader United States economy is feeling the pressure. Inflation is on the rise again, labor markets are jittery, and some economists are predicting a 0.9% drop in GDP growth for the year.
Now, the intention behind these tariffs was to stimulate domestic manufacturing and reduce dependence on foreign supply chains. And long-term? That might still happen. But for now, a lot depends on how long these tariffs stay in place, how other countries respond, and how our own policies adapt. Some analysts are saying we might see signs of recovery in 2026. In the meantime, investors have to sharpen their strategies.
This hits homebuilders and renovators hard. Think lumber, steel, drywall, and appliances, all these are essentials for construction, much of it sourced from Canada and China. Canada alone supplies about a third of all lumber used in United States homebuilding. As you can imagine, this drove costs up fast. Construction budgets are now up 4% to 6% across the board, and home renovation projects are seeing a 10% to 15% jump in costs. Those extra costs? They get passed on to investors, flippers, and eventually, tenants and buyers.
Builders are scaling back. Some are increasing prices, some are shrinking home sizes, and others are delaying projects altogether. That all means one thing: less supply.
And on the renovation front? Same story. Materials like drywall, appliances, anything made with steel or aluminum are all more expensive now. Projects are getting paused or shelved, and timelines are dragging out.
But as always, market shifts come with potential uplifts.
Here are some useful tips for continue growing your portfolio in a strategic way:
Short-Term: Expect caution. Investors are pausing or downsizing their activity while they wait for clarity. The Federal Reserve has already hinted that interest rates will not come down anytime soon. If you have cash available this is the time to act.
Medium-Term: Things might start to improve by late 2025 into 2026. Technavio projects that the United States residential construction market could grow by $242.9 million from 2025 to 2029. That growth is driven by household formation, despite the current hiccups.
Long-Term: It is all about data. There is no crystal ball, but if you stick to smart underwriting, cash flow positive deals, and conservative projections, you will position yourself well for the future.
Final Thoughts
Look, we understand this market is tricky. But the best investors are not waiting for the perfect conditions, they are adapting to today’s realities and finding opportunities in the chaos.
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