The supreme court throws out president Trump’s tariffs. What does this mean for real estate building costs and interest rates? Why is the chart above so important? Will this decision drastically alter the real estate market one way or another? What happens now? What will the federal reserve do now? What are the three big changes to real estate and the economy?
What was in the Supreme Court’s decision on tariffs?
“We decide whether the International Emergency Economic Powers Act (IEEPA) authorizes the President to impose tariffs.”
That is the first sentence of Chief Justice John Roberts’ opinion for the court in Learning Resources, Inc. v. Trump, decided today, Feb. 20, 2026. The case arose from a challenge to broad tariffs that the executive branch imposed pursuant to IEEPA’s grant of authority to “regulate . . . importation.” The court’s decision on whether the president had the power to do so was unambiguous:
“The President asserts the extraordinary power to unilaterally impose tariffs of unlimited amount, duration, and scope. In light of the breadth, history, and constitutional context of that asserted authority, he must identify clear congressional authorization to exercise it. IEEPA’s grant of authority to “regulate . . . importation” falls short. IEEPA contains no reference to tariffs or duties. The Government points to no statute in which Congress used the word “regulate” to authorize taxation. And until now no President has read IEEPA to confer such power. We claim no special competence in matters of economics or foreign affairs. We claim only, as we must, the limited role assigned to us by Article III of the Constitution. Fulfilling that role, we hold that IEEPA does not authorize the President to impose tariffs.”
Long and short, the constitution clearly gives Congress the ability to tax and this ruling upholds this authority.
What happens now after the tariff ruling?
The ruling was a stinging defeat for the President, and he has vowed to continue his tariff model. Shortly after the ruling he imposed a 15% across the board tariff. This emergency order can only last for 150 days and Congress does not appear to be in any mood to continue with big increases in tariffs. We will have to see how this plays out, but the ruling substantially weakens the President’s hand with unilaterally imposing tarrifs.
What impact does the tariff ruling have on building costs?
I’ve seen studies stating that building costs would rise by about 10k/house on average due to lumber and drywall cost increases due to tariffs. Although 10k/house sounds plausible, the real answer is we don’t actually know yet as the tariffs are still being negotiated. But, even if the costs increase by 10k this is not going to monumentally alter prices one way or another. Assuming the average home is 300k, the tariffs would add up to around 3% increase, this is assuming the customer eats all the costs.
With the new supreme court ruling building supply prices should decrease, but on the flip side prices will still likely rise as building supply costs are only one piece of the puzzle. With the recent immigration crackdown, labor supply in building is drastically decreasing which will ultimately lead to much higher labor costs. Long and short, don’t expect much savings from tariffs on building costs.
What impact will the tariff ruling have on interest rates?
Interest rates will have the biggest impact from the tariff ruling. There are two drivers of interest rates:
- Budget Deficits: Theoretically the tariff’s were supposed to bring in billions in fees for the federal government which would offset the runaway spending. The reduced deficit would in turn lead to lower rates due to less supply of treasuries. Check out the chart above of 10 year treasuries. As soon as the ruling was announced there was a sharp uptick in 10 year treasuries which shows the market is now pricing in higher budge deficits.
- Inflation: Tariffs were basically a tax slowing down the economy. With the recent tariff ruling we could see an increase in economic activity which would lead to faster growth and inflationary pressures.
We will see the pressure from budget deficits and inflation push rates higher than they are today which will put a crimp on real estate.
Federal Reserve will sit tight on interest rates due to tariff ruling
The one certainty about the tariff ruling is that the federal reserve is more inclined to sit tight to see how inflation settles. To be safe the federal reserve will make no drastic moves one way or another until they get better data, this will leave interest rates where they are best case, but likely higher for the remainder of the year.
What is the overall impact of the tariff ruling on the economy?
There will be two primary impacts of tariffs on the economy:
- Lots of confusion: In the short term there are more questions than answers: What happens to tariffs that have been paid? What happens going forward? What about the trade deals that have already been signed? Long and short, there are more questions that will take time for the market to work through and initially this will lead to a pullback in long term commitments/purchases until the fog clears.
- Inflationary pressures: After the dust settles, I think we will see inflationary pressures as the removal of tariffs will add additional stimulus to the economy. How much inflation and for how long is the question, but overall getting rid of steep tariffs will be a boon to the economy and lead to faster growth.
What does the tariff ruling mean for real estate prices/activity
Unfortunately, it is not clear cut what the impact will be. On the positive side we should have faster growth in the economy which should delay any prospective recession. But, on the flip side rates will stay where they are or head higher, which will continue to hinder affordability. Based on these two competing priorities, the impact to real estate should be minimal over the next year or so with closing volumes remaining low and interest rates remaining where they are to possibly higher. Fortunately, I don’t think the tariff ruling will have huge upside or downside implications in the near term.
Although the news is all over the huge impacts of tariffs. The real story is what happens in the long term. Long term, we have bigger issues of persistent inflation with runaway government spending which will ultimately lead to downside risk in real estate, but this could be in the 2-4 year cycle. Hopefully congress will figure out the spending problem before the downside scenarios occur.
Additional Reading/Resources
- https://www.cnbc.com/2026/02/21/supreme-courts-trump-tariff-decision-five-takeaways.html
- https://www.mpamag.com/us/mortgage-industry/market-updates/could-a-supreme-court-tariff-ruling-send-mortgage-rates-soaring/
- https://www.fairviewlending.com/what-happens-to-the-economy-the-results-will-surprise/
- https://www.fairviewlending.com/bitcoin-plunge-impact-on-real-estate-and-economy/
- https://www.fairviewlending.com/will-real-estate-prices-rise-are-the-predictions-wrong/
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Glen Weinberg personally writes these weekly real estate blogs based on his real estate experience as a lender and property owner. I’m not an armchair reporter/writer. We are an actual private lender, lending our own money. We service our own loans and own commercial and residential real estate throughout the country.
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Written by Glen Weinberg, COO/ VP Fairview Commercial Lending. Glen has been published as an expert in hard money lending, real estate valuation, financing, and various other real estate topics in Bloomberg, Businessweek ,the Colorado Real Estate Journal, National Association of Realtors Magazine, The Real Deal real estate news, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.
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