Some of the biggest commercial real estate finance companies are expressing serious concern surrounding President Donald Trump's trade war.

A first-quarter survey from the CRE Finance Council found its index of industry sentiment fell 30.5% from the fourth quarter, marking the second-largest drop since the pandemic in 2020. The drop reflects the growing concerns over economic uncertainty and tariff policies that have led to market volatility.

"The CRE finance industry finds itself at a genuine crossroads," CREFC CEO Lisa Pendergast said in a statement. "The dramatic drop in our Sentiment Index clearly signals concern, but beneath the headline numbers we see pockets of cautious optimism, particularly regarding how lower interest rates might finally break the transaction logjam that has persisted through much of 2024."

The organization surveyed its board of governors, which is represented by 50 senior executives at major commercial real estate finance firms, including TPG, Ares Management, Starwood Property Trust, BlackRock and UBS Investment Bank.

When asked about economic outlook over the next 12 months, 80% of respondents said they are expecting worse economic conditions, a sharp increase from 12% last quarter. Fifty-nine percent of respondents expect negative impacts from the government, up from 2% last quarter.

The report also said 60% of respondents surveyed after Trump's "Liberation Day" announcement were "very or extremely concerned" about tariff impacts on construction costs and development.

In an April 2 announcement, Trump unleashed a wave of reciprocal tariffs on imports from more than 150 countries. The tariffs created panic across the sector and markets across the globe plummeted, though he later put a 90-day pause on higher tariffs to most countries.

In the weeks since, the market has reacted to daily news on the tariff negotiations, with the administration even considering slashes to the 145% tariffs on Chinese goods down to 50%-65%.