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President Trump’s tariff policy and developing trade war with China are pushing Americans to rethink major purchases, according to a Redfin-commissioned survey on Thursday.
The Ipsos survey of 1,004 U.S. adults revealed 24 percent of Americans are canceling plans to purchase a home or car due to fears about tariffs, and 32 percent said they’re pausing such purchases. When political affiliation is thrown into the mix, Democratic voters are more likely to cancel (36 percent) or delay (43 percent) purchase plans than Republican voters (15 percent and 21 percent, respectively).
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On the other hand, 9 percent of survey takers said they’re speeding up purchase plans, and 8 percent have already made major purchases.
Chen Zhao
“Betting markets have the odds of a recession at higher than 50 percent, which is understandably making people wary of putting a big chunk of their money toward a house or a car,” Redfin Economics Lead Chen Zhao said in a written statement. “Consumers are tightening their belts because they are rightly nervous about their job security and the prospect of paying more for everyday expenses.”
The Trump administration imposed 25 percent tariffs on steel and aluminum in March, a 25 percent tariff on autos on April 3, and a 10 percent blanket tariff on imports from most U.S. trading partners on April 5.
Some goods from Mexico and Canada, including lumber, are exempt from the 10 percent baseline tariff under the the United States-Mexico-Canada Agreement (USMCA). A Biden-era 14.5 percent tariff on Canadian lumber remains in effect.
Country-specific “reciprocal” tariffs of up to 50 percent against dozens of countries that the Trump administration announced on April 2 are on hold until July 9, with the president claiming leaders of 70 countries have reached out to negotiate trade deals.
But with the exception of some exemptions for smartphones and other electronics, imports from China are now subject to duties of up to 245 percent, including a 145 percent tarriff on all goods and additional tariffs on specific goods ranging from between 7.5 percent to 100 percent.
China has retaliated by imposing 125 percent duties on U.S. imports, and halting the export of rare earth elements and magnets vital to the defense, energy, and automotive sectors.
Tariffs, according to a previous Inman article, are paid by buyers (e.g., U.S. companies) importing foreign goods. The buyer must pay the tariff with the Customs and Border Protection before the goods are allowed into the country. Although some companies have the means to absorb the costs of increased tariffs, most will pass on the cost burden to consumers.
“The ball is in China’s court. China needs to make a deal with us,” White House Press Secretary Karoline Leavitt said on behalf of President Trump. “We don’t have to make a deal with them.”
Fifty-five percent of survey respondents said Trump’s tariff policy has made them less likely to make a major purchase this year. Gen-Xers and baby boomers are most likely to pause or cancel major plans this year (60 percent), while Gen-Zers and millennials are more likely to push the pedal to the metal on large purchases this year (23 percent).
When it comes to housing, 34 percent of respondents said they don’t have enough money to cover monthly mortgage or rent payments if they lost their job or faced another financial crisis. For those who do have emergency savings, 56 percent could only cover up to six months of housing costs.
Although consumer sentiment is bleak — The April University of Michigan Index of Consumer Sentiment fell to its lowest level since 2008 — Zhao said there’s still a silver lining for homebuyers who decide to have the grit — and financial means — to stay in the market.
“The drop in demand could cause home prices to stay flat, or even fall, and there’s some chance mortgage rates could drop in the next few months,” she said.
