Real Estate Braces For Fresh Tariff Whiplash After Supreme Court Ruling
Commercial real estate’s collective sigh of relief after the Supreme Court’s decision Friday to strike down a portion of President Donald Trump’s tariffs was swiftly followed with a sharp inhale, as the industry soon realized it was entering a new era of uncertainty.
The court’s ruling removes tariffs imposed under the International Emergency Economic Powers Act but leaves the administration with several alternative pathways to pursue trade restrictions, including short-term measures already in motion.
Key questions — including whether and how businesses will be refunded for previously collected tariffs — remain unresolved. Together, those developments are bringing a fresh wave of confusion for companies and investors, with downstream effects on commercial real estate activity and capital markets.
“We all thought we’d arrived at stability, however many months ago,” said Julie Park, a partner at Blick Rothenberg. “But of course, it wasn't, as it turns out, because things have changed again.”
Following the court’s 6-3 ruling that tariffs implemented via the IEEPA were unconstitutional, Trump promised on Friday afternoon to strike back with stronger alternatives.
On Saturday, the president announced a 15% global tariff on top of non-IEEPA tariffs already in place, citing a trade statute never before invoked by a president. It was slated to go into effect Tuesday, but hours before midnight, U.S. Customs and Border Protection told importers in a memo that the rate would be 10%.
The administration is working on a separate order to raise the rate to 15%, a White House official told NBC News.
There are several alternative tariff routes the administration has already implemented or is likely to explore, although those duties come with restrictions such as rate limits, investigation requirements and time limits.
However, this doesn’t mean CRE stakeholders can finally put tariffs and their sweeping impact on supply chains, interest rates and investment decisions in the rearview mirror.
While not offering free rein over trade as IEEPA did, alternative tariff routes — and the administration's vow to explore them thoroughly — threaten to upend the relative status quo over the last several months.
The tariffs Trump implemented on Saturday using Section 122 of the Trade Act of 1974 are widespread and don’t require additional steps to implement, but they are limited to 150 days in place without congressional action, said Bryan Riley, director of the National Taxpayers Union Foundation’s free trade initiative.
Congress may be skeptical about extending the tariffs because the 150-day period is so close to the midterm elections and the tariffs are unpopular, he said. Still, the president may follow this move with additional, more permanent measures.
“At the end of 150 days, they could go to zero,” Riley said. “Well, then what are we going to have? Who knows?”
Other avenues include tariffs on specific sectors or countries, but those largely can’t be put in place overnight because those trade laws have either rate or time limits or require investigations from various departments to implement, Riley said.
Trump has used one of these provisions to put in place the current levies on semiconductors, pharmaceuticals, steel, aluminum and lumber.
Babak Hafezi, an adjunct professor of international business at American University, said the impact of tariffs isn't felt overnight. It takes time for the levies paid at the top of the supply chain to trickle all the way down.
With tariffs' impacts ongoing and lingering, inflation has stayed stubbornly above its 2% target, which is at least part of the reason Federal Reserve governors are wary of loosening monetary policy.
“Tariffs are not something that immediately shows up on the economy,” Hafezi said. “It is a leech, a small, dragged-out leech.”
The Refund Question
One of the biggest questions in the immediate aftermath of the Supreme Court decision is how the government will approach refunding businesses that paid the illegal import taxes.
The court didn’t decide whether the administration is responsible for refunding collected taxes to affected businesses or what the process would look like, leaving the issue open.
In a dissenting opinion, Justice Brett Kavanaugh said the interim effects of the court's decision could be substantial.
“The United States may be required to refund billions of dollars to importers who paid the IEEPA tariffs, even though some importers may have already passed on costs to consumers or others,” Kavanaugh wrote. “As was acknowledged at oral argument, the refund process is likely to be a ‘mess.’”
Some politicians have already hit the ground running.
After the court’s ruling, Illinois Gov. JB Pritzker sent a bill for nearly $8.7B to Trump to refund state residents, which he shared publicly. In a separate letter to Treasury Secretary Scott Bessent, U.S. Senator Maria Cantwell of Washington called for an “expeditious and transparent process” for the administration to refund businesses affected by the illegal policy.
“Many American businesses, especially small and medium-sized businesses, have struggled to pay these illegal tariffs and, for some, the financial strain has placed them on the brink of bankruptcy,” Cantwell wrote.
More than 1,000 companies have sued to get a portion of the billions in tariffs refunded. It could take years for them to get repaid, Hafezi said. The refund process will likely depend on additional litigation and whether the import taxes collected have been spent, he said.
“This is a very convoluted system. We don't know where it's going to fall,” Hafezi told Bisnow. “The tariffs were illegal, so that money has to be given back. But how it's given back and how many lawsuits it will take and if every single person creates a lawsuit, that's going to be a case.”
But there has been debate over who ultimately bears the cost of the tariffs —importers or U.S. consumers — a discussion that could have ramifications for potential refunds.
“If you're looking at refund scenarios, you obviously can't refund consumers, if they've ultimately borne the cost of the additional duties,” Park said. “Is there going to be reluctance from the U.S. authorities to refund duties in those scenarios? The devil's always in the details with things like this.”
The Big Picture
At the end of the year, there were signs that CRE investors had learned to operate amid the trade uncertainty.
The fourth quarter featured an uptick in investment volume, which increased by 29% year-over-year to $171.6B, according to a CBRE Capital Markets report. Annual volume totaling $499B was 22% higher than in 2024.
Although industrial space may benefit from tariffs pushing companies to invest domestically, the billions of dollars collected from the taxes is money that didn’t go into buying more inventory or investing in expansion, Hafezi said.
“Commercial real estate requires long-term predictability,” Hafezi said. “When you don't have long-term visibility, you don't know where the economy is going to be and you don't know what the risks are. That really makes it harder for you to invest.”
While overall investment volume improved in Q4, inbound cross-border investment fell by 37% year-over-year to $6.4B, according to CBRE.
The persistence of uncertain U.S. capital markets is starting to cause foreign investors to question continued investment in the country — even though the American market is deep and liquid, Hafezi said. Those foreign investors would rather have more control and certainty over their money in their own economies, he said.
The only thing that would create stability and certainty would be reverting to rates the U.S. started at prior to any of these measures being introduced, Park said.
“If you got to a stable point with the rates being uniform and not touched, even if they were higher, at least it's certainty,” Park said. “It's the flip-flopping backwards and forwards that's really untenable for businesses.”
UPDATE, FEB. 24, 9:32 A.M. ET: This story has been updated to reflect that the tariffs implemented on Tuesday will be 10%.
