Trump’s tariffs have been a huge point of contention across the world lately, including in Australia, for affecting the global economy.
Here’s a quick rundown: Since coming into office this year, Trump has imposed worldwide blanket tariffs on all countries that export to the US, on all imports with few exceptions. These tariffs range from as little as 10% for countries like Australia to almost 50% for countries such as Vietnam and Cambodia, and far higher for China.
Prior to this, the US had free trade agreements with different countries, where most goods weren’t charged tariffs.
Currently, there is a 90-day pause in place for Trump’s tariffs. But before you get any ideas, this does not mean they are eliminated. Rather, most countries who were hit with higher tariffs than the minimum 10% will only face the baseline tariff of 10% during this time. Meanwhile, Trump hiked tariffs on China to 145%.
You might have also heard that in March, the US imposed 25% tariffs for all imports of aluminium and steel, which are key building materials. Tariffs on specific goods like these, are remaining the same during the 90-day pause period.
So, you might be asking yourself, how will tariffs imposed by the US impact the Australian property market, and what are the pros and cons?
We’re here to break it down. We’ll be talking about how housing affordability is being affected by the changes to construction costs, potential future rate cuts and the value of the Australian dollar. Let’s get straight into it.
1. Impact on construction costs
Let’s firstly discuss the benefits of the tariffs on construction costs.
For a bit of background, commonly used construction materials include concrete, cement, brick, steel, timber, aluminium and glass. Australia imports many of these materials, and because of the US tariffs, the cost of these items could change.
Why? Supply redirection.
It is now less likely the US will want to purchase building materials from China due to the currently high tariffs. Chinese producers will therefore likely direct their supply away from the US towards elsewhere, including to Australia. This higher supply can make materials cheaper and therefore reduce the cost of construction in Australia.
However, Australia does maintain anti-dumping measures, meaning that sudden excessive inventory from supply redirection may cheapen prices, but not as extremely as some may hope for.
Dumping happens in instances where a country sells products to Australia for lower than their own domestic or production prices, only to raise prices later. This can push Australian companies out of the market, which is largely the reason for anti-dumping policies. For example, duties to combat artificially low prices.
Anti dumping duties are not based on volume, nor entire groups of products, but rather specific items. If we use steel as an example, products like steel wire rods or reinforcing bars would have anti-dumping duties, rather than all steel products. (HERE, FROM AFTER THIS POINT) /
Therefore, supply redirection can benefit Australian construction companies, as it can increase access to lower-priced goods from countries like China. So long as these goods aren’t priced artificially low and align with market value, Australia may benefit, including from lower prices for end consumers, or home buyers.
In addition to supply redirection, the US tariffs may benefit the local Australian economy by encouraging construction companies to purchase materials from Australian suppliers.
You might recall the 25% tariffs on all steel and aluminium US imports. These tariffs can reduce US demand for Australian construction material imports, leaving more materials available to Australian local companies. A higher supply can mean lower prices that Australian builders might want to capitalise on.
Furthermore, Australian companies may be incentivised to purchase locally to avoid potential delays arising from uncertainty around international trade, its changing policies and disruptions./
Now, let’s move onto the drawbacks.
Firstly, if Australia does try to source materials more locally, supply may not be able to keep up with sudden demand, resulting in delays and local price surges.
Additionally, while there are measures against it, dumping could still be incentivised among countries facing sudden excessive supply amid the US tariffs. These countries may quickly look to offload stock elsewhere, including to Australia, for artificially low prices, which could threatened Australian companies if anti-dumping is not adhered to.
Another drawback is that although less common, some construction companies purchase from US suppliers or manufacturers that source from a country other than the US, typically for goods such as machinery or specialty tools. An American supplier or manufacturer might source items or product components from China, experience price increases from the tariffs on China, then transfer those onto their final product and the Australian consumer.
Aside from some of the points we have explored, the impact on construction material prices can have further effects on the Australian economy, leading onto our next topic.
2. Rate cuts
It can be argued Trump’s tariffs will make future rate cuts more likely for Australia. Why?
When the US imposes high tariffs on countries like China, costs increase for US consumers. As a result, the US might look to other sources of manufacturing, causing Chinese manufacturing to slow down.
This is where Australia comes in. China, being Australia’s biggest trade partner, accounts for around 30% of Australia’s trade. Australia largely supplies China with raw materials such as iron ore, / and if China’s manufacturing is slowing down, there is less demand for raw materials from Australia. Therefore, China buys less from Australia, harming the Australian economy.
With fewer exports and purchasing volumes, Australian companies may find themselves in positions where they cannot afford to hire more labour or keep all current staff, raising unemployment.
In response, the RBA could decide to cut rates to stimulate the economy. This can give borrowers, whether businesses or home buyers, easier access to loans due to increased affordability.
The benefits of rate cuts are clear, particularly when we draw our focus back to the property market.
They increase serviceability for home loans since it costs less to borrow.
People who own homes experience savings on their mortgages, either through variable rate loans or refinancing fixed rate loans, as well as property appreciation from the surge in demand that comes with rate cuts.
Builders can also benefit, through being able to obtain construction loans easier. This helps to combat issues such as labour shortages, potentially leading to faster construction and more housing supply.
Sounds great. But does everyone really benefit? Not quite.
First-time home buyers are among the groups that could experience difficulty during rate cuts. At first glance, it seems easier to purchase a home. However, with reduced rates, demand for property typically increases, exacerbating housing prices.
It seems the Albanese government has tried to account for this by banning foreign purchases of established dwellings for two years, in effect since 1 April 2025.
However, some argue that the impact of the ban will be limited as foreign buyers account for a mere 1% of property transactions in Australia.
Therefore, it’s likely that despite the efforts of Albanese, we will still see buyers purchasing more properties, though more domestic rather than foreign, reducing housing supply and causing prices to spike.
On top of that, renters are also likely to be indirectly disadvantaged during rate cuts. Like with first-time home buyers, it might initially seem easier for current renters to switch to buying a home.
However, investors during this time might decide to buy properties to flip and resell rather than rent them out, reducing the amount of properties available to rent, driving up competition and rent prices.
Finally, renters with money in interest-earning savings accounts will also receive less money to put towards either rent or saving up for a home.
Though potential future rate cuts impacting the Australian property market is one example how US tariffs may affect the Australian economy, the effects can extend further.
3. Depreciation of the Australian Dollar
As mentioned earlier, the US tariffs, particularly on China, have had repercussions for Australia, including a decline in the value of the Australian Dollar. Not only has the impact on manufacturing affected the currency, but out of uncertainty, previous AUD holders have fled to assets like the US dollar, further depreciating the AUD’s value.
How could this affect the Australian property market?
Firstly, we may see a rise in foreign investment. Though foreign investors are currently a small portion of property buyers in Australia, there may be more if foreign currencies are stronger than the Australian Dollar for a period of time. It’s possible that foreigners will want to capitalise on this window.
While foreign investment can drive up house prices, any current foreign investors will be pushed towards increasing housing supply, benefitting the property market. This is due to both the ban on foreigners purchasing established residential dwellings and the exception that they can be purchased if converted to more dwellings, contributing to housing availability. Additionally, buyers of vacant land must develop it within four years.
If foreigners are contributing to building more properties, affordability could increase for local buyers. /
Moreover, the Australian dollar’s decline could incentivise the expansion of Australian home buyer schemes, such as with an increase in spots and adjustments to income caps, increasing accessibility to these programs.
However, there are also some obvious challenges with the Australian dollar’s depreciation. /
Firstly, there is the cost of building materials, as explored to an extent earlier. Let’s further expand on this.
A weaker dollar for Australia means that imported construction materials naturally become more expensive, since more Australian dollars are needed to match the equivalent price of another country’s currency.
This can affect builders, house flippers, those looking to renovate their properties before putting them on the market and end consumers. For context, Australia imports almost half of its construction materials.
Furthermore, the Australian dollar’s instability can leave domestic buyers feeling uncertain about their incomes and expenses, as well as cause unemployment to rise, creating obstacles for home loan approvals.
While things might appear one way or another at first glance, the impacts of Trump’s tariffs on the Australian housing market are mixed, from the possibility of future rate cuts to challenges like higher construction costs and difficulties for renters. Do the advantages outweigh the disadvantages, or vice versa? We’ll leave that up to you!
