Trump's 50% Tariffs: Real Estate Sector Sees Silver Lining in Lower Material Costs
While Trump's 50% tariffs may disrupt global trade, real estate experts see potential benefits in reduced material costs and sustained housing demand.
Real EstateTariffsAffordable HousingRbiInterest RatesReal EstateAug 27, 2025
Experts suggest that the potential reshuffling of global supply chains, driven by the tariffs, might result in reduced costs for building materials, offering developers a cost advantage in the long run. Atul Monga, CEO and Co-Founder of BASIC Home Loan, said, 'At first glance, Trump's tariffs may seem like a setback for India's housing sector. If you look closer, the outlook, especially for affordable housing, still remains positive. Government subsidies continue to reduce the EMI burden for low-income households.'
Shifts in global supply chains could reduce costs of building materials, and rising employment opportunities in manufacturing and the auto industry are helping consumers qualify for bigger home loans. While global trade may face disruption, India's housing dream remains intact, supported by strong domestic demand, policy support, and robust industry frameworks, Monga added.
Additionally, if uncertainty persists, the Reserve Bank of India (RBI) may keep interest rates low to support growth. This would mean EMIs are unlikely to rise, and financing for home purchases could remain relatively affordable. In the last RBI Monetary Policy Committee (MPC) meeting, the central bank kept the repo rate unchanged at 5.5 per cent, maintaining its policy stance as ‘Neutral’. Announcing the decision, RBI Governor Sanjay Malhotra said that the MPC unanimously voted to hold rates, following a cumulative 100 basis points cut earlier this year.
A recent SBI report suggests the central bank is unlikely to ease interest rates in its upcoming October 2025 policy meeting, as inflationary pressures remain elevated. 'A rate cut in October looks difficult. Even a rate cut in December looks a tad difficult,' the SBI report noted, citing persistent price pressures and uncertainty around economic growth in the first and second quarters of FY26.
Frequently Asked Questions
What is the impact of Trump's 50% tariffs on the real estate sector?
While the tariffs may initially seem like a setback, they could lead to more competitive pricing due to potential shifts in global supply chains and reduced costs for building materials.
How are global supply chains affected by the tariffs?
The tariffs may cause a reshuffling of global supply chains, which could reduce the costs of building materials, benefiting real estate developers in the long run.
What is the RBI's stance on interest rates in response to the tariffs?
The Reserve Bank of India (RBI) may keep interest rates low to support economic growth if uncertainty persists, which could keep EMIs affordable for home buyers.
How does the government support affordable housing?
Government subsidies continue to reduce the EMI burden for low-income households, making affordable housing more accessible despite the tariffs.
What does the SBI report predict about future interest rate cuts?
The SBI report suggests that the central bank is unlikely to ease interest rates in its upcoming October 2025 policy meeting due to elevated inflationary pressures and economic uncertainty.
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