Liberation Day, One Year Later: Chronic Uncertainty And 'More Confusion Going Forward'

One year after “Liberation Day” tariffs roiled the global economy and paralyzed key decision-makers across the country, there still isn’t much trade policy clarity. 

Commercial real estate spent 2025 learning how to price in the risk anyway by rewriting contracts, shifting sourcing and pushing deals forward. But just as the industry was getting more comfortable operating in the new environment, a Supreme Court decision on the legality of many of those Liberation Day tariffs has plunged CRE back onto uneven ground. 

“Construction wants confidence. Construction wants people to say, ‘I'm going for it,’” Associated Builders and Contractors Chief Economist Anirban Basu said. “Project viability is lacking, interest rates are high, and so we can expect things to get worse before they get better.” 

On April 2, 2025, President Donald Trump kicked off a roller coaster year of trade policy with the wide-ranging imposition of tariffs on more than 150 countries, sending CRE into chaos as the industry stared down confusion over materials costs and who would ultimately bear the brunt of the additional expenses. 

Trump promised tariffs would bring back factories and jobs in droves, make Americans wealthy and bring in trillions of dollars to pay down American debt. But that didn't happen.

Basu said many developments’ projections are failing to justify potential investments. As a result, construction-related manufacturing spending has fallen 15% over the past year, he said. 

Construction starts fell 9% in April 2025 before rebounding throughout the year, up 2.6% in December and expanding by 5.4% on an annualized basis, according to Dodge Construction Network. Data centers provided the primary engine for growth in 2025, as multifamily and manufacturing starts dropped last year.

Tariff policy throughout the year was an ever-moving goal post, shifting every 4.7 days on average in 2025, according to Newmark. Policy changed every 2.2 days on average in April and 1.3 days in July, as the planning for specific rates on materials was often only as up to date as the latest refresh of a social media feed.  

Since then, macroeconomic pressures have ratcheted up beyond tariffs. The U.S. entered a conflict in Iran at the end of February that has rattled CRE recovery, and the yield on the 10-year Treasury has remained above 4% for almost all of the last 30 months, even as the Federal Reserve has cut short-term interest rates.

“The biggest question that day was, what does the end of this look like? What is the goal that we're trying to achieve?” said David Greek, Greek Real Estate Partners managing partner. “It wasn't clear. And I'd say a year later, I'm not sure it's any more clear.”

The Supreme Court ultimately ruled in February that the Liberation Day tariffs imposed under the International Emergency Economic Powers Act were unconstitutional. Hours later, the president announced a new wave of tariffs under a different law, once again disrupting the status quo. 

Christopher Barnett, a partner with Berger Singerman who works with developers to negotiate contracts with general contractors, said he and his clients had hoped the Supreme Court decision would offer greater tariff visibility. 

“If anything, that opinion in February, I believe, might have created more confusion going forward,” Barnett said. 

Working Through The Whiplash

Lisa DeNight, who works as managing director and head of North American industrial research at Newmark, said global corporate planning is permanently pricing in tariff volatility now. Industrial players are accelerating shifts in how they source materials and shortening supply chains where possible.

Companies best positioned to weather volatile tariff impacts have already moved production or partnerships toward more tariff-friendly regions, particularly North America, with Mexico emerging as a key hub for manufacturing and investment, DeNight said. Tariffs are a catalyst for accelerating supply chain changes that began during the pandemic, she said.

Industrial leasing activity toward the end of 2025 was boosted by delayed deals finally closing after months of hesitation following Liberation Day, DeNight said. There was just over 60M SF of net industrial absorption in the fourth quarter, the strongest figure in two years and almost matching the 70M SF in new deliveries, according to Newmark.

While uncertainty briefly stalled decision-making, tenants are now moving forward, driven in part by a wave of upcoming lease expirations that offer many attractive options for securing quality space.

“Indecision is not going to be rewarded, especially in this moment,” DeNight said. “This particular market, in this particular year, it's probably never going to happen again.”

Preconstruction timelines are getting longer as development teams shift sourcing to lower-tariff markets, plan more deliberately around materials costs and look at other ways to control costs, Barnett said. Contracts are also evolving to include greater cost sharing and larger amounts set aside for contingencies to absorb potential price swings while still capping overall project costs, Barnett said. 

As a result of all of the added safeguards in place, Barnett said he isn’t seeing the same hesitation from the market that he did when the industry was sorting through the turmoil in the immediate aftermath of Liberation Day. 

Greek defined the state of the market differently.

“It's hard for me to call it a comfort level. I see it more as uncertainty fatigue,” he said.

“People and companies are just tired of saying, ‘We can't make this decision because we can't predict the future,’ and are pivoting more towards, ‘Well, we need to make this decision, and it doesn't matter what the future is like,’” he added. 

The Drag On Construction Spending

But new macroeconomic headwinds such as the conflict in Iran and persistently high 10-year Treasury yields, combined with tariffs, will further complicate decision-making. 

Rising construction materials costs and stubborn interest rates are weighing heavily on development activity, dragging down overall construction spending, Basu said.

Overall inputs to construction are up just 3.1% over the past 12 months, but specific materials have spiked in price. Natural gas has increased 30% year-over-year, copper wire and cable are up 27.1%, steel mill products are up 20.9%, and iron and steel have increased by 15.3%, according to ABC.

Large-scale projects require long-term clarity, and the economic environment is making that harder to come by, Basu said.

“The economy is very uncertain right now, and so this level of uncertainty continues to climb, and that makes it more likely that projects will be at least postponed, if not canceled,” Basu said.

Refunds And The Path Forward

One major outstanding issue from the Supreme Court decision is what will happen to refunds for the illegal charges — and what will happen to the small businesses that are least equipped to weather a period of refund uncertainty, DeNight said. 

Small-bay industrial properties, which often house small businesses, still have vacancy rates multiple percentage points tighter than other segments of the market, but the rate has slowly increased, she said. 

“That's less because of the consolidation to some brand-new 500K SF warehouse and more because of economic stresses and cost stresses to that small-business segment,” DeNight said. 

Companies, including titans like Costco, Nintendo and Hasbro, have filed more than 3,000 lawsuits against the federal government in the Court of International Trade in the hopes of getting money back, The Wall Street Journal reported. 

DeNight said even compared to January, in March there was a bit more caution in developers’ mindsets following the new injection of uncertainty into the global marketplace. She said her outlook for speculative new construction is lower now than it was then. 

Developers and investors have pushed through obstacles such as labor cost upticks, materials cost increases or financing cost spikes, Barnett said. He said he fears there will come a point when the industry’s momentum will start to dry up and the tailwinds that buoyed the industry through a tumultuous 2025 will dissipate. 

If interest rates were to rise materially, project financing would become more complicated and impact developers and buyers, Barnett said. 

“The macro stew right now seems really dangerous,” Barnett said. 

Ultimately, trade policy comes down to what one man is thinking during one moment, Greek said. While there have been aspects of that in previous administrations, that unpredictability has been amplified under the Trump administration, making logical predictions difficult. 

“It's really, really hard to predict a single variable when you have to predict 12 other variables and how they're going to act with them,” Greek said. “Not to be too pessimistic, but that's not going to get better. It's going to get more complicated over the next couple of months.”