This Week In A Nutshell: The White House’s response to the Supreme Court invalidating President Trump’s tariffs under the International Emergency Economic Powers Act and Tuesday’s State of the Union address will dominate this week. There’s little economic data coming down the pipeline.
Upcoming Attractions
We are unlikely to see large market movements this week resulting from economic data or Fed news, though a slew of officials are slated to speak. Markets will likely be focused on further details from the White House on trade policy. Last week’s Supreme Court ruling was not surprising, but much is uncertain about the path forward. The president may provide more information in Tuesday’s State of the Union address. He could also use the opportunity to announce new initiatives aimed at combating affordability issues, particularly in housing.
Last Week’s Highlights
Rates remained mostly unchanged last week, though the Supreme Court finally issued their long-anticipated decision on the International Emergency Economic Powers Act (IEEPA) tariffs implemented last year. The ruling has been widely expected since the fall, when the court heard oral arguments. The White House’s response to essentially recreate the IEEPA tariffs using alternative means has also been essentially what analysts expected. Elsewhere,
FOMC minutes indicated that, consistent with the market’s expectations, the Fed is in no hurry to cut rates. In fact, there was a slight tilt toward the possibility of hiking rates. Finally, GDP data for the fourth quarter disappointed relative to expectations, but a lot of drag came from the lengthy October government shutdown. Economic growth is expected to rebound in 2026.
Diving a Little Deeper
What happens now with tariffs, and how will it affect housing? The bottom line: the macroeconomic and financial market impact of this ruling should be limited because the overall average effective tariff rate won’t change much. The White House can easily pivot to other mechanisms for implementing the desired tariffs. However, the tariff rates faced by specific countries and products may shift around significantly, creating a new set of winners and losers.
- After the Supreme Court announced its ruling, the White House quickly pivoted to levying a 10% (later changed to 15%) global tariff using section 122 authority, which can only last 150 days. They can use that time to do the investigations that are required for implementing new tariffs via section 232 and section 301 authority, which is likely to be their eventual strategy. It seems clear from this progression of events that the White House is solving for keeping the average tariff rate around the same as before the ruling. Alternatively, they could have used this as a convenient offramp to scale down the tariffs in a midterm election year where affordability is the paramount issue.
- The tariff rates applied to specific countries (including ones that have already negotiated deals) and products may now shift. Uncertainty is very high here. And there is the potential for certain products and countries to end up with much higher or lower tariff rates. That could have meaningful implications for specific industries like construction.
- Finally, somewhere between $150B and $200B of tariffs have been paid. Whether that is refunded is unknown right now. In the unlikely scenario that consumers receive the refund, that could provide a nice tailwind for the economy. However, in the more likely scenario that businesses receive the refunds, the macroeconomic effect would be small.
Redfin Housing Market Reports
Home Prices Start Year Up Just 1% as Buyer’s Market Keeps Growth in Check
- Pending home sales fell to the lowest level since 2023 and existing-home sales dropped the most since 2022 as elevated housing costs curbed homebuyer demand.
- Sellers also retreated, but still far outnumbered buyers, meaning the buyers who were in the market could negotiate on price.
- The typical home that went under contract did so in 66 days—the slowest January pace in a decade.
It’s a Buyer’s Market: America Has 44% More Home Sellers Than Buyers—a Near-Record Gap
Mortgage Rates Drop to Lowest Level Since 2022, Handing Homebuyers More Purchasing Power
