Did the Supreme Court just take control of mortgage rates?!

We’ve spent weeks talking about Trump and the Federal Reserve, but then this morning the Supreme Court entered the housing chat with their ruling on tariffs. They ruled in a 6-3 decision that Donny doesn’t have legal authority under the International Emergency Economic Powers Act to impose sweeping tariffs on imports. How is that going to matter for your real estate strategy? Stick with my kid, we got a lot to cover. 

This morning’s news brought one of the most consequential legal and economic rulings of the year. The US Supreme Court struck down a significant portion of Trump’s tariff program. This tariff drama has been a major part of the Administration’s promises to Make America Great Again, at least financially. Interestingly, earlier this week I was reading a Bloomberg article about how the tariffs weren’t working. Keep in mind they’ve been in place while the Supreme Court was pondering their legality. But the US posted one of its largest annual trade deficits in decades for 2025. This is tricky so let me explain. In 2024, the deficit was bigger but after major efforts with wild ass tariffs – the deficit hardly budged. 

Is that on Trump? 

Well the December deficit alone was $70.3 billion. It is largely because imports continued to outperform exports. A trade deficit means the US is importing more goods – meaning supporting other global economies – than it is exporting. When a trade deficit becomes persistent, it creates pressure on pricing within our economy. The shortfall for the full year of 2025 was $901.5 billion. Now Trump has explained that he started this Trade War to reduce our reliance on foreign goods and that it would be foreign companies paying the higher costs. But the data we received this week showed it was mainly American consumers and companies paying Trump’s tariffs. 

What does this have to do with real estate?

As mentioned, tariffs raise the cost of imported goods. They are like a tax on consumers because manufacturers and retailers pass the higher costs on to their customers. This contributes to inflation, especially when it comes to electronics, lumber, and appliances. So the Supreme Court batting down tariffs could ease inflation concerns on some important everyday goods. 

We could have seen a big rally on that news today. Unfortunately, the Supreme Court isn’t catering to my production goals. Their ruling also means companies and importers may now seek refunds on the tariff revenue the government collected – to the tune of $175 billion. Not good for our balance sheet. 

But Trump is not one to go down without a fight. He’s saying they will pursue other legal avenues to make sure the tariffs stay in place. 

My hope? Since this has never been a cover your (meaning my) ass type blog… 

Hopefully, this ruling eases one component of the Fed’s very complicated rate calculus. Reducing tariff pressure can lessen inflation concerns, just focus on that please Powell. 

If inflation continues to look like it’s cooling, that reduces pressure on long-term interest rates. Remember, stories matter more than math. Investors trade on expectations for inflation when they price bonds so cooler inflation expectations can pull yield down, including those Treasury yield that have an inverse relationship with mortgage rates. 

The only problem is uncertainty. Real estate markets don’t like it. From the buyers and sellers on main street who will delay decisions trying to make sense of the headlines to the traders on Wall Street driving demand for mortgage bonds. This is where a good decision-making framework would come in really handy. (wink wink) 

Here’s my takeaway from this week. Buyers who have affordability right now are king. More and more headlines are pointing to this moment of opportunity to break into the housing market. We don’t know how long it will last and of course it’s still a challenge to find the right home with such limited inventory. But those who are qualified now and shopping have an advantage that is becoming increasingly obvious. Once it becomes certain, the window is gone.