What do Trump's tariffs mean for Australian property?

Donald Trump has been back in the White House for less than three months, but his administration has already sent shockwaves through the global economy. 

He's wasted no time launching an aggressive round of tariffs aimed at countries around the world, Australia included. And while the impacts might seem far removed from our day-to-day lives, this unfolding trade war could end up having real implications for consumer confidence, the economy, and the Australian property market.

So what exactly is happening? And how concerned should we be about the potential impacts on Australia's property market?

Trump’s tariffs are rattling the global economy

In a dramatic shift toward protectionism, Trump has announced a sweeping 10 per cent tariff on virtually all imports into the United States, with substantially higher rates for China which seem to be changing on a daily basis.

While Australia hasn’t been hit as hard as some of its global peers, it hasn’t been spared either — US tariffs on Australian exports are now set at 10 per cent, with no exemptions, although the situation is highly dynamic and subject to change at any time.

Trump’s justification? That countries like Australia have been taking advantage of the US for too long. In a public statement, he criticised Australia’s strict biosecurity rules, saying, “We imported $3 billion of Australian beef last year... They won’t take any of our beef... We’re doing the same thing starting at midnight.”

The impact on global markets has been swift. Stock markets around the world have dipped in response. On the day of the tariff announcements, the ASX 200 dropped around 1.7 per cent, echoing losses in the US and Europe. 

The Australian dollar has also suffered, recently falling below 60 US cents — a level not sustained since the early 2000s.

There are growing fears this could trigger a broader trade war, particularly with China. If the world’s two largest economies escalate tit-for-tat tariff hikes, global growth could take a serious hit, with flow-on effects for trade-exposed economies like Australia.

Australian sentiment has already taken a hit

Zooming in on the domestic response, the early signs are that Australians are already feeling uneasy about what comes next.

Consumer confidence — a key driver of property market activity — took a sharp dive in April. According to Westpac’s latest survey, sentiment fell by 6 per cent overall. 

However, for respondents who were surveyed after Trump’s tariff announcement, the fall was closer to 10 per cent, down to a pessimistic index reading of 86.6.

As Westpac’s chief economist Matthew Hassan explained, the scale and breadth of the tariff announcement triggered a sell-off in global financial markets and sparked fears of economic instability. He added that "there is a clear risk of more significant sentiment declines in the months ahead."

Prime Minister Anthony Albanese has taken a firm stance against the US tariffs, stating that Australia will not compromise on biosecurity laws, and has flagged a potential dispute with the US under the terms of the Australia-US Free Trade Agreement. 

The government has also announced a $50 million support package for exporters and a $1 billion loan program for businesses needing to pivot to new markets.

Politically, the trade war has quickly become an election issue. With the federal election just weeks away, both major parties are under pressure to reassure voters they can steer Australia through this turbulence.

What it could mean for the property market

So what does all of this have to do with Australian property?

While international politics doesn’t shift home values overnight, the housing market is deeply influenced by economic sentiment. If buyers are feeling uncertain about the economy, their job security or their financial position, they’re far less likely to stretch themselves to purchase a new home.

We’re already seeing signs of caution. Agents in some markets are reporting softer interest from upgraders and investors in recent weeks, and auction clearance rates in Sydney and Melbourne have pulled back slightly. It’s still early days, but the mood has shifted in some respects.

Another major factor at play is interest rates. Before the trade news broke, the Reserve Bank had signalled it was in no rush to cut rates further. 

But with markets now pricing in a sharper global slowdown, rate cut expectations have ramped up. Westpac, for example, now expects the RBA to cut the cash rate as early as May, and deliver a total of 1.0 per cent of cuts before year’s end. The other three big banks are more or less in agreement.

Cheaper mortgage rates could be a saving grace for housing. As Michael Yardney from Property Update noted, “lower interest rates make borrowing more affordable and in general stimulate our property markets.” In that sense, a global downturn may actually bring some relief for borrowers and investors.

Still, the risk is that the uncertainty will linger. If Australia’s major trading partners slow down, that could put pressure on employment in export-heavy industries like mining, agriculture, and manufacturing. If job losses mount or wage growth stalls, we could see a broader pullback in housing activity.

That said, most experts agree that the Australian housing market remains underpinned by strong fundamentals. 

A chronic housing shortage, population growth and pent-up demand have continued to support home values across most capital cities. And while consumer sentiment may dip in the short term, once there’s more clarity about the trade outlook and the election outcome, activity may bounce back.

KPMG’s Brendan Rynne summed it up well: “We are in a big experiment where we are judging rhetoric against logic – and we will find out soon enough which one’s the winner.” 

Until we see how the US and China respond, it’s too early to know whether we’re heading for a prolonged slowdown or a short-lived shock.

In the meantime, we'll need to keep a close eye on buyer confidence and interest rate moves. If the RBA continues cutting, that could offset some of the anxiety in the market and even spur activity later in the year. But it’s clear that global politics will remain a wildcard in the property story of 2025.

Disclaimer: This article is intended for general informational purposes only and does not constitute financial, legal, or investment advice. While we have sourced insights from reputable commentators and data providers, predictions and interpretations are subject to change. Readers should conduct their own research or consult a qualified professional before making any property or financial decisions.