Tariffs, Treasury Yields, and the Housing Market: Navigating Economic Uncertainties

Ryaan Zahidani '28

Imagine this: you are a senior at Rutgers University, on the verge of graduation, scrolling through Zillow for your first apartment or home – and you realize prices are out of reach, mortgage rates are volatile, and the market feels uncertain. But why? On April 2nd, also known as “Liberation Day”, President Trump unveiled a new round of tariffs, including a 10% universal tariff on all foreign imports, with specific countries like China facing even steeper penalties – up to 60% on some goods. While designed to protect U.S. industries, these policy changes have far-reaching economic implications. In particular, they have created ripple effects in U.S. Treasury Yields, mortgage rates, and the broader housing market- issues that impact students and young adults trying to make good financial decisions in turbulent times.

When tariffs are imposed, they can trigger both inflationary pressures by increasing the costs of imported goods and recessionary fears due to higher volatility within the stock market. According to the Wall Street Journal, the yield on the 10-Year Treasury Note dipped below 4% on April 4th and was sitting at roughly 3.887%, its lowest settle since October. This drop occurred as investors became wary of the potential recession and uncertain about the tariffs' impacts, and shifted their capital toward risk-free assets such as Treasury Notes, Bills, and Bonds. Basic economic principles were at work: as demand for these government securities increased, their prices rose, and yields fell due to the inverse relationship between bond prices and yields. When investor demand for newly issued bonds increases, their prices rise relative to face value. Because a bond's yield is determined by dividing its fixed coupon rate by its current market price, higher market prices for these bonds translate into lower yields.

After Trump’s announcement, a persistent trade war, coupled with fears of retaliation from countries like China, led to further market turbulence. While tariffs may be seen as protective for domestic industries, in reality, they disrupt global supply chains, dampen investor confidence, and raise the cost of doing business in the U.S. All of this makes investors jittery, and that sentiment is reflected in Treasury yields, influencing nearly every corner of the economy—including the cost of borrowing for home loans.

In a welcome twist amid these economic headwinds, recent data from Yahoo Finance revealed that most mortgage rates had fallen on April 5th. According to Zillow, the 30-year fixed mortgage rate dropped by eight basis points to 6.39%, marking its lowest point since early March, while the 15-year fixed rate declined by nine basis points to 5.72%. Mortgage rates tend to decrease when the economy is under strain, as indicated by the slight uptick in unemployment, from 4.1% to 4.2% in the March jobs report, and by comments from Federal Reserve Chair Jerome Powell, who warned that tariffs could push up inflation and cool economic growth. This temporary dip suggests that, despite underlying uncertainties, this temporary dip may provide a brief window of opportunity to lock in favorable mortgage rates before a potential rebound.

Tariffs imposed on essential building materials such as steel, lumber, and aluminum directly push up construction costs. According to The Mortgage Point, builders estimate that the added costs could increase the price of a newly constructed home by over $9,200. This hike in expenses is typically passed on to the consumer, whether you are in the market to buy or rent. Moreover, these tariffs have contributed to a slowdown in new housing starts, as builders face ongoing uncertainty regarding the long-term costs of essential materials. The National Association of Home Builders (NAHB) has highlighted that the cost of building materials has surged by 34% since December 2020. Such rapid increases not only delay or cancel planned construction projects but also tighten the supply of available homes, further driving up prices in an already pressured market.

For Rutgers students and young professionals, these macroeconomic shifts have concrete implications. With rising home prices and increased borrowing costs, entering the housing market becomes even more challenging. Whether you plan to rent off-campus right after graduation or aspire to buy your first home in New Brunswick, higher mortgage rates and construction costs mean that every dollar counts. Taking advantage of financial literacy programs and housing workshops at Rutgers can help you navigate these turbulent times and make more informed decisions about your financial future.

While Trump’s tariff policies, the resulting fluctuations in Treasury yields, and mortgage rates may seem like abstract economic concepts, their effects are very tangible—especially for Rutgers students and young adults. These policies influence the cost of building and financing homes, shaping the very real prospects of affordable housing for Gen Z. By staying informed, utilizing available resources, and advocating for targeted policy interventions, you can better navigate these challenges and work towards a future where homeownership is within reach. In an uncertain economy, knowledge and proactive financial planning are not just tools for survival—they are the keys to shaping a more accessible and secure future.