From tariffs to roofs: the spillover effects of trade policy on housing markets

Purpose This paper aims to examine how the 2018 US tariffs are associated with short-run changes in local housing market outcomes across metropolitan areas with varying levels of manufacturing exposure. The purpose of the study is to understand how a major trade policy event relates to housing market activity, prices and liquidity in the short run, an area that remains largely unexplored in the existing literature. Design/methodology/approach Using monthly data from Zillow and the Current Population Survey, the authors analyze housing outcomes across US metropolitan statistical areas (MSAs) between 2015 and 2019. Findings The authors find that MSAs with greater manufacturing exposure experienced lower housing market activity but slightly higher home prices following the imposition of tariffs. Comparing the most manufacturing-intensive MSAs with those at the mean exposure level, the authors find that housing market activity declined by approximately 3%, while average home prices increased by about 1.2%. These patterns suggest that the tariffs operated as dual sentiment shocks, introducing short-run uncertainty while also fostering optimism about the protection of domestic industry. Originality/value The findings highlight an underexplored channel through which trade policy shapes local economies by transmitting shifts in industrial confidence and perceived job security into housing market dynamics.