Market uncertainty has subsided somewhat in recent weeks, but the risk of rising interest rates and renewed volatility persists, particularly with impending tariff and fiscal policy changes. Investors should monitor these developments and, where possible, capitalize on favorable conditions, especially for commercial real estate acquisitions, said John Chang, chief intelligence and analytics officer at Marcus & Millichap.

Since March, interest rates have largely ranged between 4.25% and 4.5%, with a downward trend in recent weeks. Uncertainty has been a bigger concern for investors after surging to its highest level ever after President Trump announced tariffs at the beginning of April. With a 90-day pause on most tariffs and generally positive economic data coming in, uncertainty tapered in May and June.

“Even though the tariffs are at their highest level since 1936 – about six and a half times higher than they were last February – I think a lot of people have mentally adjusted to the new tariff climate,” said Chang. “I think a lot of people are filtering tariffs into the background noise at this point.”

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With the 90-day pause on tariffs coming to an end and the implications of the new tax bill becoming more apparent, uncertainty may surge again, according to Chang. Although some tariff deals are in process, there is not much clarity on what will happen with duties on other countries. Mexico’s current tariff rate is 10.7%, while Canada’s effective tariff rate is 11.2%.

“Most economists anticipate that the tariff rates will continue unchanged, but President Trump recently leveraged the threat of raising tariffs to force Canada to change a recent digital tax policy,” said Chang. “So while the baseline scenario is for tariffs to remain where they are, it's entirely possible that they could be changed on short notice.”

Meanwhile, the tax bill signed last week contains many policies that are positive for commercial real estate investors, including 100% bonus depreciation on new acquisitions. However, other policies contained in the bill could increase uncertainty, including reductions in funding for Medicaid.

The bill will likely require additional interpretation, which could mean less clarity on some facets of the new tax laws. But whether this will be a significant challenge remains to be seen, according to Chang.

One thing is more certain, and that is that the tax bill will further increase the deficit by $3.3 trillion over the next decade, and the increased debt ceiling will mean more Treasuries will be issued, which could put upward pressure on treasury rates. If the Federal Reserve and foreign investors continue to draw down their treasury holdings, the issuance could put upward pressure on interest rates, said Chang.

“We might be in the eye of the storm,” said Chang. “I'm not saying that uncertainty will surge or that interest rates will definitely be run up, but the probability of these risks are things we need to consider as investors. Once again, investors may want to capitalize on the current relatively low interest rates if possible.”

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Kristen Smithberg

Kristen Smithberg is a Colorado-based freelance writer who covers commercial real estate, insurance, benefits and retirement topics for BenefitsPRO and other industry publications.