Impacts of Tariffs on Multifamily Real Estate
The current tariff situation is unstable and likely to keep changing. The tariffs that matter most to U.S. apartment construction are those on goods from China, Mexico, and Canada. In 2023, the National Association of Home Builders reported that the largest suppliers of construction imports used in U.S. residential production were China (20%), Mexico (11%), and Canada (8%). As of April 26, 2025, the new maximum tariffs on these countries are: China at 145%, Mexico at 25%, and Canada at 25%.
Apartments are relatively well positioned for a trade war, but tariffs are not “good” for existing rental housing.
Tariffs are a tax whose intended effect is to increase the price of imported goods, pushing consumers to buy alternatives. The pricing power of each player along the supply chain of a tariffed good will determine who absorbs the increased cost and how much ultimately gets passed on to the final consumer. To the extent that tariffs further increase the cost of construction, they will make new development less viable and further constrain new supply. However, tariffs alone probably won’t be a major factor driving up apartment rents and values.. Growth is good for housing, taxes are not.
It’s worth noting that some supply chain diversification in the construction industry has already happened. When tariffs were discussed in 2018 under the first Trump administration many developers started to hedge their supply chain exposures and prepare alternate suppliers. Construction components that were almost exclusively imported from China before 2018, such as countertops, vinyl flooring, and kitchen/bath fixtures, now have alternate options in Mexico and Southeast Asia.
Apartments are poised for strong rent growth once again, not because of tariffs, but because interest rates over the last three years have significantly hurt the economics of new construction, significantly cutting off new supply. Once the generational bulge in new apartments is finished delivering in 2025, there will be a sharp drop-off in new deliveries. If rental demand stays strong, we could see significant rent increases from 2026 to 2028.
Source: Walker &Dunlop research
A tariff-driven exacerbation of construction costs may extend the period of the already inevitable low supply that is coming. However, if those same tariffs trigger a recession, they may also slow rental demand. Which of these forces wins out will determine whether tariffs are ultimately good or bad for apartment owners. Either way, apartments are already well-positioned to perform strongly, thanks to interest rates that stunted new construction and the long-term shortage of housing. Apartment ownership should be a relatively safe harbor in a tariff storm.