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.