Charles Esther
As the U.S. faces an escalating trade war with several countries, the consequences of President Trump’s tariffs are being felt not only on the national scale but also in local economies — particularly in housing markets.
While the tariffs are expected to raise prices across the board, the effects are far from uniform, with certain states more vulnerable than others due to their reliance on global trade.
According to the National Association of Realtors (NAR), states with a higher dependency on exports are poised to experience greater disruptions to their local job markets and housing prices.
How Tariffs Affect Housing Markets
The housing market is inherently linked to the broader economic health of a region.
When tariffs disrupt industries that rely on international trade, the local job market is often the first to feel the effects.
As companies face reduced demand for their products abroad, they may cut back on hiring, which in turn can decrease the purchasing power of potential homebuyers.
For housing markets in these states, the tariffs could mean slower home sales, lower home prices, and a reduction in overall market activity.
Nadia Evangelou, senior economist at the National Association of Realtors, explained, “When we talk about trade, most people think that it’s something that happens at the national level, but in reality, it plays out very differently from state to state.
By looking at where trade is happening and how much each state relies on it, we can better understand how sensitive certain states might be to global disruptions like tariffs.”
The Most Vulnerable States to Tariffs
The following states are considered the most trade-reliant, meaning they are most vulnerable to the economic disruptions caused by the ongoing tariff battle:
1. Louisiana
Exports as a % of GDP: 26.5%
Louisiana leads the list as the state most dependent on trade, with a significant portion of its GDP — 26.5% — coming from exports.
The state’s economy is heavily reliant on industries such as energy and chemicals, and major export destinations like China, Mexico, and the Netherlands all import over $5 billion worth of goods from Louisiana.
Antagonistic trade relations with these countries could significantly harm the state’s economy, leading to a reduction in consumer confidence and an overall negative impact on housing demand.
2. Texas
Exports as a % of GDP: 16.8%
Texas is another major player in the export economy, with nearly 17% of its GDP tied to exports.
The state’s robust energy sector, alongside technology and manufacturing industries, makes it highly susceptible to global trade disruptions.
While Texas is diverse, it remains highly vulnerable to changes in trade policies and tariffs, which could lead to fewer job opportunities and reduced demand for housing.
3. Kentucky
Exports as a % of GDP: 16.3%
Kentucky’s economy relies heavily on exports such as automobiles, aerospace products, and machinery.
With tariffs on these goods, Kentucky’s housing market could be impacted as companies adjust to changes in their international trade relationships, potentially leading to job losses and lower homebuyer confidence.
4. Indiana
Exports as a % of GDP: 11.4%
Indiana’s manufacturing base is central to its economy, making it particularly vulnerable to the impact of tariffs.
The state’s export activities, including automotive and industrial equipment, face risks due to retaliatory tariffs from key trading partners.
As these industries contract, the housing market in Indiana could see less activity and more price fluctuations.
5. South Carolina
Exports as a % of GDP: 10.9%
South Carolina’s economy is closely tied to industries like automotive manufacturing, aerospace, and agricultural products.
Retaliatory tariffs could lead to job losses in these sectors, reducing disposable income for residents and, in turn, leading to slower housing market activity.
6. Oregon
Exports as a % of GDP: 10.3%
Oregon’s reliance on exports such as machinery, technology, and agricultural products places it among the top states vulnerable to tariff impacts.
As trade tensions affect these key sectors, the state could experience economic slowdowns that trickle down into the housing market, with fewer home sales and slower growth in home prices.
7. Michigan
Exports as a % of GDP: 8.7%
Michigan’s automotive industry and manufacturing base are integral to its economy.
As the state exports a significant amount of automobiles and machinery, tariffs on these products could lead to significant disruptions in the local economy, directly affecting the housing market through increased job insecurity and lower housing demand.
8. Mississippi
Exports as a % of GDP: 8.7%
Mississippi’s economy is closely tied to industries like chemicals, agriculture, and machinery.
The state’s housing market is vulnerable to shifts in these sectors, and disruptions in global trade could result in less economic activity, fewer job opportunities, and slower home sales.
9. New Mexico
Exports as a % of GDP: 8.5%
New Mexico is heavily reliant on exports of energy products and mining materials.
The state’s housing market could be affected by trade disruptions in these sectors, with potential job losses and reduced economic activity leading to decreased demand for homes.
10. Alaska
Exports as a % of GDP: 8.5%
Alaska’s economy, much like New Mexico’s, is dependent on natural resources such as oil and gas.
Tariffs affecting these industries could harm the state’s economy, reducing income for residents and decreasing demand in the local housing market.
The Big Picture: Tariffs and Housing Market Trends
Though the trade war is far from over, it’s clear that certain states are more vulnerable than others when it comes to housing market performance.
Areas that rely heavily on exports will experience bigger disruptions as the effects of tariffs reverberate through local economies. The result could be lower home prices, reduced job security, and a dip in home sales.
As the global trade environment continues to evolve, it’s important for both potential homebuyers and sellers to be aware of the local economic conditions and understand how broader economic policies, like tariffs, can directly impact their real estate decisions.
By closely monitoring these trends, individuals can make more informed choices and better navigate the complexities of the housing market.
