President Trump signed a memorandum Thursday directing his advisers to calculate new global tariff levels, a move that could disrupt international trade norms and spark intense negotiations, in addition to his recently increased duty on steel and aluminum.

State of Play

• The directive considers not just existing tariffs but also foreign taxes, subsidies, and exchange rate policies that Trump views as “unfair.” His goal is to balance trade relationships and push companies to shift manufacturing back to the U.S. (AP News, Feb. 13)

• The reciprocal tariffs will not be immediately imposed, but will be customized for each foreign trading partner, based on five different areas: tariffs the nation imposes on U.S. products, unfair taxes imposed, cost to U.S. businesses and consumers from another country’s policies, exchange rates, and any other practices the trade representative’s office determines is unfair. (The Hill, Feb. 13)

• The proposed 25% duty on steel and aluminum announced Monday, set to take effect March 12, 2025, has raised concerns about higher construction costs, supply chain disruptions, and broader economic impacts on commercial real estate. (Bloomberg, Feb. 10)

• Trump's trade adviser Peter Navarro said the measures would help U.S. steel and aluminum producers and shore up America's economic and national security. (Reuters, Feb.11)

Commercial Real Estate Impact

• Tariffs may present several challenges for commercial real estate, including increased construction costs, potential project delays, and heightened uncertainty among investors.

• Higher tariffs on Chinese steel and aluminum will increase structural material costs, while tariffs on Canadian lumber will impact framing and finishing costs.

• Additionally, any trade disruptions with Mexico could further strain budgets by limiting access to affordable cement, steel, and glass. (Capright, Feb.5)

• Many commercial real estate projects depend on materials imported from Canada, including softwood lumber for framing and steel for structural components. With tariffs in place, developers are seeing their material costs surge, leading to increased project costs and delayed developments. (InvestinginCRE, Feb.7)

• The National Association of Home Builders (NAHB) projects that these tariffs could raise the cost of imported construction materials by $3-4 billion, depending on the specific rates. This increase may affect builders' ability to deliver new projects and could have implications for housing affordability. (NAHB | GlobeSt, Feb.11)

• Tariffs are expected to raise construction costs, potentially by up to 10%. This increase could lead to higher project costs and may affect the feasibility of certain developments. (GlobeSt, Feb.12)

• In an NAHB housing market index survey published last week, 64% of builders said they expected higher material costs to be an issue for them in 2025. (NationalMortgageNews, Feb.11)

Looking Ahead

• Commerce Secretary nominee Howard Lutnick, and trade representative Jamieson Greer, will evaluate within 180 days whether "remedies" are needed for reciprocal trade relations in a country-by-country report.

• The Office of Management and Budget nominee Russell Vought will submit a report on the fiscal impact of these measures within the same timeframe.

• Lutnick said the measures could be ready as soon as April 2. (NYT, Feb. 13)

The Real Estate Roundtable will continue to engage with policymakers to reduce regulatory burdens and eliminate other obstacles that are impeding development and expand America’s housing infrastructure. We will continue to provide updates as the global trade situation evolves.