How Trump’s Tariffs Could Affect Hawaii’s Housing Crisis

Hawaii has been in a tense housing crisis for years. No matter what administration we are under, the issue continues to build with no end in sight. We can point fingers to the numerous factors putting pressure to this- lack of labor, foreign investors, short-term rentals, the list goes on! However, since Hawaii's geographical location in the middle of the Pacific Ocean, it’s significant hub for trade with Asia, and other Pacific nations. It’s important to educate ourselves since we are a state heavily reliant on imports.

As a realtor, it is important for me to stay up to date with global and national news from credible sources. As I write this, I will include my sources so readers can be redirected and then ultimately make their own judgement.

What’s Trump’s Tariff Plan?

On April 2, President Trump announced his plans to tariff almost every country in the world(185 countries), including allies and uninhabited countries. Here is the full list:

The new tariff rates were determined by either (a)matching at 10% or (b) dividing the number in the third column labeled “Tariffs Charged to the US.” by 2. Sadly, this is completely inaccurate due to the fact that the third column is not at all tariffs. It is actually each country’s U.S. trade deficit divided by its exports to the U.S.

Why does this affect us? Ultimately, any tax levied on a company/state/country will be put on to the consumer. No entity is willing to cut their margins for the sake of taxes, and that is the end of discussion. There is a lot of talk about the other country paying that tax. Yes, more taxes will be charged to the country, but they will need add that tax to their bill when they export it over to us. Subsequently, the business owner that sells it to us will add that tax to the our bill so they can continue business as usual. If you think of GE Tax in Hawaii, who pays for it? Not the state. Not the business. It is guaranteed at the end of your receipt.

You can read more about the tariff calculations here:

https://www.reuters.com/graphics/USA-TRUMP/TARIFFS/movayyxzjva/am no economist, but tariffs are a known fact to not be a successful tool

How will it affect Hawaii Housing

I can go on and on about that, but let’s get to how this will affect us as soon as next week. Here is what you can expect to see.

Appliances Will Cost More:

One home can have 10-15 household appliances. That can add up, especially for the first time home buyer who might be buying an older re-sale property or to a flipper who wanted to make their next sale more affordable. Almost all appliances are imported from abroad, and even just one tariff on a few appliances can affect the whole industry.

So if next week comes and Trump decides to only tariff, let’s say China, we still will see a majority of appliances increase in price. Why is that? Well we have learned from past tariffs that a lot of companies take advantage of trade wars and make it a good excuse to also increase their prices even though they were not levied with a tariff. For instance, just 6 years ago, Trump put a tariff on Korean washing machines. Within the same amount of time, we saw dryers also increase in price at the same rate, even though they were not tariffed. This is because washers and dryers are typically sold together and it was a perfect opportunity for businesses to be able to increase rates for both. Read more here:

https://finance.yahoo.com/news/higher-prices-extra-jobs-lessons-from-trumps-washing-machine-tariffs-185047360.html

Home Building Resources Will Cost More:

Lumber, steel, appliances, furniture, and glass are all important resources needed to build a home. Those I just listed and hundreds of other items found in the any household will be affected by the tariffs.

A lot of our items come from China, which was hit with one of the higher tariffs of 34%. In Hawaii, a lot of people relied on cheaper alternatives shipped from China to keep homes affordable.

Affordable Home Developers Will Stop Building:

A big and simple reason why we have a housing crisis is because we have a housing shortage. One solution is to build more, however, we already know that building costs a lot more in Hawaii and permitting can take forever.

With prices of these materials and labor expected to skyrocket, developers will be deterred from investing/building any affordable housing. Instead, these developers may pivot to building more luxury homes to at least walk away with some profit. From a tough situation we were already in, this will dig us deeper into a Hawaii with more luxury homes inviting more wealthy investors.

Home Prices and Rent Prices May Rise:

If inventory slows down, just as we had seen in COVID, both home prices and rent prices will rise. This will be furthered by less homes being built with the increased prices on resources.

Stock Market Instability:

With a lot of first-time home buyers or buyers in general holding a lot of their savings in the stock market, the tariffs have brought the US stock market to unimaginable new lows. This can stop a lot of potential buyers from moving forward in their plans to buy in 2025.

What can you do?

So what can you do now to prepare? It depends on your situation and at what point in your journey you are in.

If you are looking to buy your first home, be up to date with new affordable homes that are being constructed. There are a ton of resources available to you that you should take advantage of.

If you are looking to sell, just be cautious of what the buyer’s market looks like if you need to purchase a subsequent home.

The best thing to do is to schedule a call with me. Text me at (808)782-0072 to get started.