As a stock market investor and consumer, I\u2019m disappointed in the new tariffs President Trump has imposed\u201410% on imports from China\u00a0and\u00a025% on imports from Mexico and Canada, including a\u00a010% duty on Canadian energy imports\u00a0(oil, natural gas, electricity). If these tariffs persist all year without resolution, corporate earnings could take a\u00a02%-3% hit, which means a similar drop in the\u00a0S&P 500\u00a0or more wouldn\u2019t be surprising.<\/p>\n
As expected, the retaliations came fast.\u00a0Canada\u2019s soon-to-be-gone Prime Minister Trudeau\u00a0hit back with\u00a0matching 25% tariffs\u00a0on\u00a0$155 billion worth of U.S. imports, targeting\u00a0alcohol and fruit, which could significantly impact major U.S. exporters.<\/p>\n
Meanwhile,\u00a0Mexico\u2019s President Sheinbaum\u00a0rejected Trump\u2019s claims about Mexico collaborating with criminal organizations and implemented\u00a0her own retaliatory tariffs on U.S. goods. She also suggested the U.S. should focus on fighting\u00a0domestic drug trade and money laundering\u00a0rather than blaming Mexico.<\/p>\n
China\u2019s\u00a0finance ministry said on Tuesday, Feb 4, it will impose additional tariffs of 15% on coal and liquified natural gas imports from the U.S. and 10% higher duties on crude oil, farm equipment and certain cars, starting Feb. 10, 2025.<\/p>\n
This is the classic\u00a0\u201cstanding at a concert\u201d\u00a0analogy\u2014if one person stands up, the row behind them has to stand up too, leaving\u00a0nobody better off.\u00a0Tariff wars tend to follow the same pattern, so the logical outcome is a\u00a0compromise. The question is:\u00a0how long will markets have to endure the uncertainty before that happens?<\/p>\n <\/p>\n Everyone knows tariffs hurt the global economy, which is why a rational Trump will likely negotiate a compromise. However, with new tariffs on European goods also on the table, it\u2019s unclear how quickly world leaders will reach an agreement before consumer confidence takes a major hit.<\/p>\n Despite the market disappointment, as a real estate investor, I see an upside:\u00a0trade wars could fuel a housing boom.<\/p>\n If trade tensions escalate, capital should\u00a0flow from riskier assets like stocks into Treasury bonds<\/a>, pushing\u00a0yields lower. If fears of a global slowdown intensify, mortgage rates could drop significantly, improving affordability and\u00a0spurring demand for housing.<\/p>\n When housing affordability increases, so do\u00a0real estate transactions, remodeling projects, furniture purchases, landscaping jobs, and mortgage originations. The housing industry is a\u00a0key driver of the U.S. economy, typically accounting for\u00a015%\u201318% of GDP. With an existing housing shortage and years of pent-up demand, lower rates could reignite\u00a0bidding wars nationwide<\/a>.<\/p>\n I\u2019ve never been big on bonds (~2% of my net worth) because I prefer\u00a0higher-risk, higher-reward\u00a0investments. I see\u00a0real estate as a bond alternative<\/a>, offering potential appreciation, rent increases, and tax advantages. Over the past 22 years, my\u00a0real estate holdings have outperformed Treasury bonds and the aggregate bond index, and I expect that to continue.<\/p>\n Of course,\u00a0owning physical real estate isn\u2019t passive. This past weekend alone, I spent three hours painting my old house after my tenants moved out. Next up: replacing grout, power washing, deck touch-ups, and landscaping the front yard. While I enjoy presenting a great product, the maintenance work takes time away from other pursuits.<\/p>\n As I get older, I find myself naturally shifting\u00a0toward more online real estate investments<\/a>\u00a0and away from physical property ownership. The appeal of a\u00a0simpler, lower-maintenance life\u00a0is growing\u2014just like the housing market might if mortgage rates drop.<\/p>\n During his previous term,\u00a0former President Donald Trump\u00a0initiated major trade conflicts, most notably with\u00a0China, starting in\u00a0July 2018. The U.S. imposed tariffs on approximately\u00a0$550 billion\u00a0worth of Chinese goods, while China responded with tariffs on about\u00a0$185 billion\u00a0worth of U.S. goods. The tensions caused market volatility before culminating in the\u00a0Phase 1 trade deal\u00a0in\u00a0January 2020, which eased some disputes.<\/p>\n On\u00a0July 18, 2018, the S&P 500 stood at\u00a02,800\u00a0before selling off to\u00a02,485 by December 18, 2018\u2014an\u00a011% decline<\/strong>. However, by\u00a0January 2020, the market had rebounded to\u00a03,300, delivering an impressive\u00a032% gain. If history repeats itself, a\u00a010%+ correction\u00a0could present a strong buying opportunity.<\/p>\n Market pullbacks always feel painful in the moment, but they\u2019re nothing new. Since\u00a01950, the S&P 500 has experienced a correction (declines of 10% or more) roughly every 19 months. Since\u00a01980, the average intra-year decline has been 14.3%, making double-digit drops relatively common. Meanwhile,\u00a0bear markets\u00a0(declines of 20% or more)\u00a0occur about once every six years on average.<\/p>\n Given that I’m currently\u00a0underweight public equities, I\u2019m eager to\u00a0buy the dip<\/strong> and I did aggressively Monday morning, Feb 3. But what excites me even more?\u00a0Buying the dip for my kids\u2014a move I hope they\u2019ll appreciate\u00a010-15 years down the road\u00a0when they\u2019re in high school or college.<\/p>\n In a game of chicken, who wins? Obviously, the\u00a0biggest player\u00a0with the\u00a0greatest ability to withstand a collision. I expect other countries to\u00a0concede to many of our demands\u00a0if they want to avoid spiraling into a recession.<\/p>\n As of now, there is a pause on tariff implementation for 30 days with Canada and Mexico as the respective leaders figure things out. Next up is the negotiations with China, the most difficult task ahead. <\/p>\n Readers, how long do you think this trade war will last? Will it push capital into real estate and drive home prices higher? How are you positioning your investments?<\/em><\/p>\n Disclaimer: This is not investment advice to you, only my thoughts about how trade wars can affect different risk assets. Please do your own due diligence and invest according to your risk tolerance and financial goals.<\/em><\/p>\n If you’re looking to invest in high-quality residential and commercial real estate, consider\u00a0Fundrise<\/a><\/strong>. Founded in 2012, Fundrise focuses on properties in the\u00a0Sunbelt region, where valuations are lower and yields are higher. <\/p>\n With a resilient economy and the potential for lower interest rates ahead, commercial real estate could be a smart way to\u00a0diversify your portfolio\u00a0and generate passive income. I’ve invested $300,000+ in Fundrise and Fundrise is a long-time sponsor of Financial Samurai.<\/p>\n Listen and subscribe to The Financial Samurai podcast on\u00a0Apple<\/strong><\/a>\u00a0or\u00a0Spotify<\/strong><\/a>. I interview experts in their respective fields and discuss some of the most interesting topics on this site. Your shares, ratings, and reviews are appreciated.<\/p>\n To expedite your journey to financial freedom, join over 60,000 others and subscribe to the\u00a0free Financial Samurai newsletter<\/a><\/strong>. Financial Samurai is among the largest independently-owned personal finance websites, established in 2009. Everything is written based on firsthand experience and expertise. Read my About page<\/a><\/strong> for more info. <\/p>\n<\/p><\/div>\n\n","protected":false},"excerpt":{"rendered":" As a stock market investor and consumer, I\u2019m disappointed in the new tariffs President Trump has imposed\u201410% on imports from China\u00a0and\u00a025% on imports from Mexico and Canada, including a\u00a010% duty on Canadian energy imports\u00a0(oil, natural gas, electricity). If these tariffs persist all year without resolution, corporate earnings could take a\u00a02%-3% hit, which means a similar […]<\/p>\n","protected":false},"author":1,"featured_media":68693,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[93],"tags":[781,13350,11209,9792,5290],"dealstore":[],"offerexpiration":[],"class_list":["post-68692","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-heat","tag-housing","tag-market","tag-trade","tag-wars"],"yoast_head":"\n![\"America's](\"https:\/\/i2.wp.com\/financialsamurai.com\/wp-content\/uploads\/2025\/02\/IMG_7744-1.jpg\")
<\/figure>\nTrade Wars May Boost the Housing Industry<\/strong><\/h2>\n
![\"Home](\"https:\/\/i2.wp.com\/financialsamurai.com\/wp-content\/uploads\/2025\/02\/IMG_7780-728x465.jpeg\")
<\/figure>\nReal Estate As A \u201cBonds Plus\u201d Investment<\/h2>\n
Taking Advantage of the Stock Market Sell-Off<\/h2>\n
![\"Canada](\"https:\/\/i2.wp.com\/financialsamurai.com\/wp-content\/uploads\/2025\/02\/IMG_7839.jpeg\")
<\/figure>\nU.S.A. Will Win The War<\/h2>\n
![\"Trump](\"https:\/\/i2.wp.com\/financialsamurai.com\/wp-content\/uploads\/2025\/02\/IMG_7806.jpg\")
<\/figure>\nSubscribe To Financial Samurai\u00a0<\/h2>\n