Trade Tariffs Blocked — Why This Could Mean Stability for Mortgage Rates
This week, a federal court blocked a wide range of President Trump’s tariffs, throwing a curveball at his trade agenda. The ruling centered on limiting the president’s authority under the International Emergency Economic Powers Act (IEEPA), but don’t expect tariffs to disappear entirely.
Trump still has backup legal tools—namely the 1974 Trade Act’s balance-of-payments authority and sector-specific tariffs (Sections 301 & 232)—to impose new or temporary levies. However, the short-term nature of balance-of-payments tariffs (capped at 15% and lasting 150 days) signals a more cautious, tactical approach ahead.
What does this mean for homebuyers and mortgage rates?
Tariffs, especially those that affect manufacturing and imports, can ripple through consumer prices, inflation, and ultimately interest rates. With tariffs blocked or limited for now, inflationary pressure could ease slightly. This means mortgage rates may stabilize or even edge downward — a welcome development for borrowers.
Taco Trade Trend: Steady Flows, Smoother Markets
Additionally, there has been a new trend in Wall Street called the “Taco Trade” which refers to a new playbook for traders: Buy the panic, sell the relief. This stability in global trade encourages consistent supply chains and reduces market volatility. For mortgages, that means less risk of sudden inflation spikes or interest rate jumps, which can help keep monthly payments more manageable for homeowners.
Put simply: “Taco trade means stable markets, which means stable mortgage rates.” When trade policies are less volatile, the mortgage market tends to breathe easier.
Nvidia’s Strong Performance — A Signal for Positive Market Sentiment
Meanwhile, tech giant Nvidia continues to impress investors with robust earnings and growth in AI and semiconductor sectors. Nvidia’s success is a bellwether for broader market optimism, which often correlates with lower bond yields.
Why does that matter?
Mortgage rates often track the bond market. When investor confidence is high and the tech sector thrives, it can signal a healthy economy with moderate inflation expectations. For homebuyers, this can translate into favorable mortgage lending conditions, including steady or potentially lower rates.
Fannie Mae and Freddie Mac: The Next Big Move?
In housing finance news, President Trump has confirmed he is working toward taking Fannie Mae and Freddie Mac public again, ending their 17-year federal conservatorship.
What’s at stake?
- Returning Fannie and Freddie to public markets could unlock billions for the government and private investors alike.
- However, critics warn that privatization might lead to higher mortgage costs if government backing wanes.
- The administration insists the U.S. government will maintain some form of guarantee to keep borrowing costs low.
For mortgage borrowers, the key will be how this transition is managed. If done thoughtfully, it could lead to a more efficient, competitive mortgage market — potentially benefiting rates and availability. But if the guarantee weakens or the process causes market uncertainty, mortgage rates could face upward pressure.
What Homebuyers and Investors Should Watch
- Tariff Developments: Stay tuned for possible short-term tariff reinstatements under alternate legal authority. The timing and scope will influence inflation and interest rates.
- Tech Sector Health: Continued strength from companies like Nvidia signals positive market momentum, which can support stable or favorable mortgage rates.
- Housing Finance Reform: The roadmap for Fannie and Freddie’s exit from conservatorship will be critical for mortgage market stability.
Bottom Line
Trade policy turbulence has momentarily paused, providing some breathing room for mortgage rates. Strong tech earnings bolster market confidence, while potential reforms at Fannie Mae and Freddie Mac promise major shifts in housing finance.
For now, homebuyers should monitor these intersecting forces closely — the evolving trade landscape, the health of key market sectors, and government actions in mortgage finance will together shape the cost and accessibility of homeownership in the months ahead.
Stay tuned for weekly updates from the Market Matrix Newsletter, your trusted source for mortgage and market insights.
Sources:
https://www.cnbc.com/2025/05/29/trump-court-international-trade-tariffs-miller.html
https://www.cbsnews.com/news/trump-fannie-mae-freddie-mac-what-to-know/