Trump’s Tariffs Are Part Fuel And Part Fire For U.S. Manufacturing Push

President Donald Trump suspended the most sweeping tariff regime in modern history in a post to his social media site Wednesday afternoon.

For Astrak US' Calum Mair, the temporary stay offers only the smallest of windows to make real estate decisions. 

“A sort of click of the fingers, and this is in effect. There's just not enough time, too much uncertainty,” said the commercial director for the manufacturer of construction and heavy equipment parts. “There's going to be market backlash. People are going to be challenged.” 

The new administration has a vision for the United States that includes rebuilding the country’s manufacturing base, one that could be a massive boon to its industrial real estate sector.

But even as many in manufacturing are investing heavily into onshoring and cheering for policy success, some say the haphazard implementation of trade policy is delaying or scuttling the plans of companies ready and eager to expand U.S. operations. 

“There's just not a lot of certainty, and that's why a lot of companies are taking this wait-and-see approach right now,” Moody’s economist Nick Villa said. 

More manufacturing facilities are likely to open their doors on American soil in the coming years to protect against the profound uncertainty swirling around international trade.

Yet decision-makers say the moves from the White House are hurting that goal as much as helping, as executives struggle to keep up with rapid-fire tariff policies that change faster than businesses can react, Mair said. 

The 90-day pause on a brutal set of reciprocal tariffs announced this week is sweeping but incomplete. It doesn’t include many levies Trump kept in place: those on Chinese imports, which at the time of publication sat at 145%, a 10% minimum tax on most countries, and a 25% tariff for steel, aluminum and imported vehicles and parts.

“We think we’re in very good shape,” Trump said in the Cabinet Room Thursday. “We think we’re doing very well. Again, there’ll be a transition cost and transition problems, but in the end, it’s going to be a beautiful thing.”

Companies looking to invest in a multibillion-dollar plant want to break ground in a stable environment, Mair said. That means they’re less likely to commit significant capital to facilities that could be rendered obsolete by shifting trade policy even before they're completed.

The rules are shifting so fast, though, that it’s also possible to be overly proactive in this environment, he said. 

“You may be making a business case to bring in a multibillion-dollar facility into the U.S. that makes commercial sense today but might not actually make commercial sense in year five or six,” Mair said.

Trump long signaled that tariffs would be coming if he retook the White House. Some executives and manufacturers took that as bluster, but others pivoted early to get ahead of the murky but steep levies he floated in speeches on the campaign trail. 

Mary O’Brien, CEO of accessory dwelling unit manufacturer Hapi Homes, had already opened a warehouse to centralize component deliveries ahead of the election. When rhetoric around trade policy continued escalating, she decided to stop importing products and source everything domestically. 

“We decided to flip everything and procure from the U.S. market because we knew there were going to be tariffs,” she said. “Even at that time, during the summer, we didn't think it was going to be like what we've seen in the last few days.”

Hapi Homes added a steel foundry to its real estate footprint and entered into a long-term pricing contract with a steel supplier to ensure that the company could continue producing the steel frames that form both the literal and figurative core of its business. 

The accessory dwelling unit manufacturer brought in more procurement staff to manage the dozens of new domestic suppliers it took to replace a single foreign exporter that had its own sources for materials. 

The moves increased Hapi Homes’ total costs, which it has largely passed on to consumers, but O’Brien said it was worth the increase to gain full control over product quality and the ability to guarantee specific delivery dates while other suppliers struggle.

“Committing to that production on our own side was something that we felt was necessary to do to allay our own customers’ fears,” she said. “We'd be a lot more worried about the uncertainty if we hadn't done that, for sure.”

The industrywide push toward more onshoring has picked up steam since Trump’s first term, manifesting as a meaningful increase in demand over the last six years. 

At the end of 2024, prior to the imposition of Trump administration tariffs, manufacturers’ share of demand for space was already up 354% compared to 2018, according to JLL.

Manufacturers currently account for roughly 19% of industrial space requirements, Greg Matter, head of the advanced manufacturing team for the brokerage, said. JLL forecast earlier this year that manufacturing demand would account for a quarter of industrial demand by 2028. 

“It's the same trend we see with [last-mile] delivery,” Matter said. “It's getting closer to your end consumer. It's a means to mitigate risk. We're in an uncertain time right now because of the goalposts moving, but the realities are that manufacturing in-region is really the future of manufacturing.”

Interest in onshoring production spiked after Trump’s election win and continued to ratchet up amid the escalating trade war. The most recent tariff announcements led to a flood of new manufacturing proposals in some cities, Matter said.  

Tim Bodner, partner and real estate deals leader at PwC, said the president’s on-again, off-again tariff proclamations have spurred activity in the manufacturing sector and attracted new sources of funding to the space. 

“It's actually increasing, not dissuading, the level of investment,” he said. “Capital, I think, is recognizing that this is a long-term secular trend here that isn't without risk, but people are actually acting on it.”

Trump’s latest gambit to bring manufacturing home follows a yearslong effort to lure high-tech manufacturers to the U.S. that has spanned multiple presidential administrations. 

During his first term, Trump imposed much more limited tariffs that were also meant to coax manufacturing back to the U.S., but the pandemic effectively stymied those efforts.

After taking over, President Joe Biden continued to push for more domestic manufacturing and found some success through his signature legislative agenda. But suitable property is thinner on the ground than it once was.

“There are some opportunities out there, but a lot of them have been picked over,” Matter said. “With the Biden administration — the Inflation Reduction Act, the CHIPS Act and the bipartisan infrastructure law — we saw a surge in manufacturing requirements, most of which prioritized speed.”

Speed is not a word typically applied to new factory construction, which even Trump himself has noted. The president suggested it could take two years to construct a new facility, and typical construction timelines can run from three to five years depending on complexity and the availability of supplies.

With limited available sites and short timelines, some manufacturers are weighing conversions of speculatively built warehouses, provided they also have access to power. Matter said he recently shaved 10 months off of a client’s construction timeline by putting them into an existing shell. 

Some decades-old buildings are good candidates for manufacturing conversion, but most require major infrastructure investments that eat into any cost or time savings that a retrofit might have generated.

Access to power remains a key bottleneck for new development, Matter said. Manufacturers have to compete with data centers for energy, and operators in that fast-growing sector typically outbid manufacturers for both properties and their electricity. 

Not all manufacturers need heavy power, but those that do are also facing delays in securing key components. The lead time for transformers, which these sites need to come online, is increasingly strained, and it now takes a year to get the critical part, Matter said.  

“The demand for power has really been unprecedented,” he said. “When you combine what's happening with AI with what's happening in manufacturing, it really is a surge in demand from a power perspective.” 

Still, growth in the sector is coming despite concerns over power, financing, the feasibility of projects and the long-term prospects of domestic production as tariffs take a bite.

For the U.S. to truly become a manufacturing powerhouse, it might have to lean into some temporary hurt. 

"At the end of the day, it’s pain that drives change,” Brandon Pappas, vice president of data analytics and business development at Lee & Associates of Illinois, said in an email. 

“My hope is that the U.S. ultimately benefits through stronger trade deals and a wave of reshoring, driven not just by economic incentives, but by companies seeking to reduce exposure to geopolitical risk and reestablish a manufacturing footprint on U.S. soil.”