New Tariffs Mean New Costs, Complexity. But CRE Is Learning To Act Without Certainty

All across commercial real estate, President Donald Trump’s latest round of tariffs was met with a shrug. 

The Trump administration imposed an increase on all Canadian imports to 35% from 25% — particularly relevant to CRE since Canada provides nearly half of the U.S.’ aluminum, plus lumber, aggregates, steel and asphalt — and an additional 50% tax on imported semifinished copper products. Those policies went into effect Friday. The administration also released updated tariff rates for dozens of countries starting Aug. 7.

Trump has also implemented tariffs on specific products and industries, most notably up to 50% on steel, aluminum and lumber. In certain instances, these tariffs supplement the duties targeted at specific countries, and the taxes don't stack. Some brokered agreements override these specific tariffs. 

Some significant questions still remain. China and Mexico, also critical producers of construction materials, were given 90-day extensions to work out trade agreements.

The new levies will impact construction pricing and deal underwriting, but months of frenetic hand-wringing seem to have given way to a resigned acceptance that high tariffs are here to stay — and the market is accepting less certainty is the reality and moving forward anyway. 

“Having a bit of clarity is better than no clarity,” OakNorth Bank Head of Debt Finance Ben Barbanel said.

The increased tariffs will affect the bottom line of construction projects. The effective tariff rate in the U.S., which combines different rates on countries and products, is about 10 percentage points higher today than it was heading into this year, Cushman & Wakefield Senior Economist James Bohnaker said on Bisnow’s First Draft Live. That said, the company estimates project costs are up only about 3% to 4% exclusively due to the impact of the tariffs. 

“It's maybe not as bad as some other estimates out there, or you might expect, just given those 50% tariffs,” Bohnaker said. 

One in 5 contractors had a project interrupted or paused in June because of tariffs, Associated Builders and Contractors Chief Economist Anirban Basu said in a release. The ABC expects the new taxes will increase input prices further, putting pressure on profit margins.  

But contractors are more optimistic about the future. Three in 5 contractors expect their sales to rise during the second half, according to a June survey from the ABC. 

The survey predated the most recent trade policy announcements, but that trajectory — a rough April and May followed by a thawing in June and real improvement in July — is playing out across CRE.

Commercial and multifamily mortgage loan originations in the second quarter were 66% higher than a year earlier and 48% above the first quarter of 2025, according to the Mortgage Bankers Association. 

Global brokerage firm CBRE posted a strong second quarter, buoyed by a wave of deals closing in April that were in the works ahead of “Liberation Day,” Chief Financial Officer Emma Giamartino said on the company’s Q2 earnings call. Tariff uncertainty held back business for the remainder of the quarter, but it is starting to get back on track.   

“We did see a slight slowdown in May and June, and then in July, like I said, it's picked up pretty materially, and at this point, July is tracking above April,” Giamartino said.

Colliers had anticipated leasing softness in the second quarter, and its business in Canada, Australia and Western Europe was heavily impacted by tariffs, which weighed on the company’s quarterly results, Chief Financial Officer Christian Mayer said on its Q2 earnings call. 

July was a different story. Leasing activity trended more positively, particularly in the industrial sector, Mayer said.  

Trackers of industry sentiment saw a sharp rebound too. 

The CRE Finance Council reported its sentiment index jumped 27.8% in Q2, one of the strongest quarterly improvements in the index's history. Sentiment turned positive, with only 27% of respondents expecting worse economic conditions over the next 12 months, a 180-degree turn from the 80% of pessimistic respondents last quarter.

“We’re starting to see people poke their heads out of the ground again,” Clear Investment Group CEO Amy Rubenstein said. “It's the uncertainty that makes people go underground for a while, and everyone freezes.” 

The latest wave of tariffs and negotiated trade deals, particularly the new rate on Canada, may give investors a bit more clarity on how to proceed, Christopher Gorman, co-head of the real estate department at Adler & Stachenfeld LLP, told Bisnow in an email.

“Getting some finality on the tariffs … does help remove some of the uncertainty,” Gorman said. “Buyers and borrowers can now try to underwrite pricing for goods sourced from Canada.”

Gorman added the caveat that there is still a lot of uncertainty around many other countries, and sellers may be unwilling to adjust prices to reflect market forces. 

That could lead to a disconnect between buyers and sellers, he said.

Tariffs are just one component of a complex financial environment that is challenging investors looking to make deals, CoreNet Global CEO Scott Wiley told Bisnow in an email. Inflation, interest rates and global political dynamics have contributed to an investor pool that is still doing deals, but with more scrutiny and more conservative assumptions. 

“Greater certainty always helps investors move with more confidence,” Wiley said. “But the reality is tariffs are just one piece of a much larger puzzle.”

Andrew Hime, head of procurement at Clune Construction, said the key to keeping up with the tariff-related pricing impacts has been to build tools that increase pricing visibility and transparency throughout the supply chain. That allows the company to make sure that its bids are a true representation of what is changing within the marketplace.

But while it may be easier to map out direct costs of certain materials due to tariffs, the wider-ranging implications on costs like labor and equipment are still being fleshed out.

“I think the industry will evolve and require more strategic procurement planning, more strategic investment in looking at how to be able to maximize the supply chain and de-risk and validate costs to make sure that there aren't bad actors out there,” Hime said.

The market preemptively priced in tariff impacts across the board in the bond markets, Hime said.

Many companies tried to bring in a stockpile of products well before tariff changes took place. But Hime said he has heard those prepared inventory levels have been dwindling, which is going to continue to ratchet up pricing and limited availability in some of these commodities.

“We've been living off of this extra surplus for a little while of inventory, and so we haven't really felt the pain yet, in some cases, of where those other prices will start coming in,” Hime said. 

But how the latest round of tariffs will play out is merely people making their best guesses, OakNorth’s Barbanel said. 

OakNorth has tried to prepare by leaning into forward-looking models that factor in tariffs, construction inputs and shifting trade dynamics in real time. Barbanel said his firm uses a blend of live market data, artificial intelligence and economic forecasting to inform underwriting decisions on a monthly basis. The firm constantly updates assumptions based on material costs, sourcing delays and broader policy shifts, not with the aim of eliminating uncertainty but to manage it.

​​“Will [the new tariffs] have an impact? Should it have an impact? Yes, of course,” Barbanel said. “Is there anybody in the world that would fully understand or be able to articulate that impact as of today? No. And if they tell you they could, they're wrong.”