With increased costs on everyday items, it may be more than the new home market affected by the president’s move
The effects of President Trump’s new tariffs may extend beyond the new housing market, according to one industry expert.
Trump announced his tariffs on Wednesday afternoon, placing a 10% baseline tax on all imports in addition to individual tariffs on countries that run a trade surplus with the United States. These newly announced tariffs are in addition to already implemented levies on Canada and Mexico.
George Carrillo is the co-founder and CEO of the Hispanic Construction Council. He said that while he understands the goals of the tariffs, he is not optimistic that they will have the desired effect by the Trump administration.
“There are some people really excited about them, depending on the industry,” Carrillo said. “And there are others that are worried, because every part we have to buy, we’re seeing five, six, seven layers of tariffs. I don’t think people… have that level of confidence in this administration, that they can pull something off this complex, especially with the lack of experience in this administration.”
For home builders, the uncertainty surrounding the cost of materials and labor makes it difficult to bid on projects with confidence, according to Carrillo. He is hoping for a clear idea of what goals need to be reached for tariffs to recede.
“What I wish this administration would do is clearly point out what they want as far as an outcome,” Carrillo said. “That would give us a better indication of… how long can we sustain that? What does that timeline look like? And as business owners, we can then say that's something I can factor into my profit and loss statement. This is what I can eat, or this is how much I have to pass on to the consumer.
“But because there is no clear direction on that, it's just, ‘trust me, it's going to be good.’”
The Trump administration stated that it hoped to raise hundreds of billions of dollars in revenue with the new tariffs, boost domestic manufacturing, and restore a balance to global trade.
Construction market struggles have been ongoing
As he traveled around the country, Carrillo observed many large-scale construction projects that had been started but not completed.
“We see open lots that have been leveled,” Carrillo said. “You see roads, but you don’t see new homes being built. You see the flags of developers, and you wonder when that’s going to happen.”
Carrillo admits that the struggles with the new home construction market are not exclusive to the current administration. However, he is concerned that the tariff actions are eroding confidence in an already challenging market.
“I don’t blame this all on President Trump,” Carrillo said. “This was part of the Biden administration, also. But right now, the promises the president made to the American people, it’s not bringing consumer confidence. It’s not bringing confidence to developers. It’s not bringing confidence to general contractors.”
The uncertainty of price fluctuations makes it nearly impossible for general contractors to provide accurate cost estimates, according to Carrillo. The longer a project is delayed, the more potential inflation may increase the final costs.
Another major factor contributing to construction delays and cost uncertainty is the immigration policies enacted during the first two months of the Trump Administration, which have reduced the construction workforce.
“When we think about workforce stability, mass immigration is sort of this moving stick of who gets to stay and who's legal today and who's not legal tomorrow,” Carrillo said. “And so, there's a lot of uncertainty in the market right now.”
Tariff effects may trickle to the purchase and refinance market
Carrillo believes it’s not just brokers dealing in new home construction financing who these tariffs may impact. With an overall cost of living increase expected, brokers may see more potential borrowers struggling to qualify for purchase and refinance mortgage loans.
“Having conversations with other financial institutions, they tell me that the debt-to-income ratio, they lose so many people just because of a few hundred dollars on their debt-to-income ratio,” Carrillo said. “That's how thin the margins are right now. So, adding any additional inflation and cost to a mortgage throws people right out of the mix.”
He laments the fact that inflation and rising costs have priced many potential first-time homebuyers out of the market, with median house prices having increased significantly since 2019.
Carrillo believes that the tariffs, combined with other economic factors and potentially less regulation in the lending market, could lead the country to another housing collapse similar to the one in 2008.
Real estate analyst Nick Gerli warns that the US housing market is showing signs of trouble similar to the 2008 crisis, especially in new home construction. Builders are struggling to sell homes and turning to rent-to-own strategies.https://t.co/AWBjDsCDYV
— Mortgage Professional America Magazine (@MPAMagazineUS) March 29, 2025
He is urging lenders and mortgage brokers to exercise extra diligence to ensure each potential borrower is well-qualified.
“What I’m hoping from bankers, mortgage lenders, brokers, and even developers too, is to really look at the risk,” Carrillo said. “Typically, I’m advocating for less restriction to create more opportunity. But in this environment right now, we need to weigh the level of risk. They need to look at those profit and loss statements, what’s being put on an application. If it doesn’t make sense and they’re not making the right calculations in this tariff world, then they should be denying those applications.”
Carrillo feels that tariffs should only be used in extreme circumstances and fears this round of tariffs could lead to a major economic catastrophe if the Trump administration is not careful.
“I believe in a free-trade market,” Carrillo said. “I believe that tariffs should be used as a form of economic punishment, but not in a way that creates this massive tariff war that I believe is going to lead us into a recession by the end of the year, and if we're not careful, could lead us into a Great Depression. It was less than 100 years ago that we started the Great Depression, and it happened because of tariffs.”
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