By Ashley Fahey – Managing Editor, National Content, The Business Journals
President Donald Trump on Wednesday announced a 90-day pause on the reciprocal tariffs that went into effect this week, except for those impacting China. Because China issued retaliatory tariffs in response to the 104% tariff imposed by Trump on goods shipped from China to the U.S., the president also said he would be raising the tariff on Chinese goods to 125%, "effective immediately."
Where to begin? Let's try to unpack the potential consequences of tariffs on commercial real estate amid the whiplash nature of tariffs and Trump's trade war, which are already having material ripple effects on U.S. businesses.
Tariff impact for CRE likely to be medium term
While tariffs — and the uncertainty around them — have already affected pricing for construction materials, most of the impact on commercial real estate from President Trump's trade war will not be felt immediately.
On Wednesday afternoon, Trump said on the social-media platform Truth Social there would be 90-day pause on all reciprocal tariffs except for the ones imposed on China. The flat 10% tariff on most other imports that took effect April 5 remain.
But if the economy were to tip into a recession, the odds of which economists say are heightened by Trump's trade war, commercial real estate dealmaking and activity will inevitably slow, too.
The predominant concern for commercial real estate so far is how much replacement and construction costs will rise, especially in an environment where recent inflation and capital constraints have already hiked the cost of deals. Tariffs will make more projects unpalatable, and that will create additional pressure on supply, particularly in the housing sectors, Tim Bodner, U.S. real estate deals leader at PricewaterhouseCoopers, told me.
There are also medium-term questions and potential impact that've yet to be determined, including whether consumer confidence will slip and lessen demand for certain sectors of the economy — which will then have consequences for commercial real estate.
Full story: http://tiny.cc/tu3g001
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.