Are we being impacted by tariffs — and what does that mean for mortgage rates?

Over the past few months, we’ve all been inundated with a classic economic term: tariffs.

If you happen to be a homebuyer, real estate agent, another mortgage loan officer — anything like that — and you’re wondering, “How does that actually impact interest rates?”, which really impacts our homebuying process, we’re going to discuss that.

Now, there are two different ways of really looking at it:

1. What we’ll call the textbook theory, and

2. The reality.

My name’s Evan Kaufman, your VA loan originator, here to help explain.

Now, my background is in economics. I loved it — that was my degree. That’s what I got in school, and I went on to get an MBA in Finance. I just love analyzing these unique things when it comes to economics and how they impact the business I’m in — mortgage loan origination and real estate.

So let’s dive in.

The Surge of Tariff Talk

Over the last few months, we’ve all been, again, inundated with the term “tariffs.”

• The United States imposing tariffs

• Then taking them back off

• Other countries firing tariffs against us

It’s honestly all over the place.

But I like to think: How’s that going to impact our interest rates? When I’m talking with clients or real estate agents, I want to help them understand where rates are moving.

Let’s Start with Textbook Theory

I go back to my old thought process and my macroeconomics textbook.

If we increase tariffs on another country, then technically, the host country — in this case, the U.S. — should see its currency increase in value.

That increase in currency value would then:

• Increase demand for the U.S. dollar

• Increase demand for bonds and treasuries

• And since mortgage rates are heavily influenced by the 10-year Treasury yield, there’s a connection

Now, you might think, “If demand goes up, interest rates must go up too.”

Nope.

More demand for bonds actually drives yields down — because the U.S. doesn’t have to offer as much return to attract investors. Think about it: if everyone wants to buy something, you don’t have to incentivize them as much to do it.

So, when demand for the 10-year Treasury goes up, the yield drops. And when that yield drops?
Mortgage rates usually go down.

So again — in a vacuum — textbook theory tells us:
Tariffs = stronger dollar = higher bond demand = lower yields = lower mortgage rates.

A Real Example

Ironically, when one of the more recent tariff announcements came out (I think it was around mid-March?), we made a bet in the office:

“Hey, I bet tomorrow Treasury yields will drop and mortgage rates will improve.”

And — surprise! — they did.

Textbook theory played out. For a moment.

Then Comes Reality

Here’s the thing: economics sounds great on paper. Economists love to predict the future — we like to believe economics is a way to apply math to life.

But people — and the world — are not always rational.

Reality adds more layers:

• Other countries respond to our tariffs by imposing their own

• Inflation reports come out

• The Federal Reserve might say something unexpected

• A new jobs report drops

• Global uncertainty enters the chat

Suddenly, everything shifts.

I remember a class called Econometrics — we had to model hundreds of input variables. But in real life, there are way more variables than we can even begin to model. It’s impossible to capture them all.

So What Actually Happened?

Yes, we saw an initial dip in rates after the tariff announcement.
But soon after:

• Other countries reimposed retaliatory tariffs

• Inflation data shifted market sentiment

• Fed commentary changed the narrative

And rates? They went back up. Then down again. Then sideways.

It’s been a roller coaster.

The Bottom Line

So — can tariffs influence interest rates?
Yes, in theory.
But no, not reliably.

There are too many other factors at play.

Still, I always remind people:

You can’t control the outside world, but you can control your own financial decisions.

If you’re a homebuyer, timing the market perfectly is nearly impossible. Rates go up, they go down. If they improve in the future, that’s why refinancing exists — especially with VA loans, where future refinancing options are flexible.

Final Thoughts

Don’t stress too much trying to catch the absolute low point on rates. It’s nearly impossible to predict. Focus on what you can control — your budget, your goals, your buying timeline.

Again, my name’s Evan Kaufman — I hope this helped explain things a bit more clearly.

Feel free to reach out or drop a question in the comments.

Take care!