The combination of speed, breadth, and uncertainty in following the plans of the Trump administration is “novel in almost every way,” Charlie Smith, managing director of Geopolitical Strategy Consulting at Newmark, tells GlobeSt.com. “And a lot of that speed is driving the uncertainty," he emphasized.
Ultimately, tariffs will “reach an end state,” as will deregulation. There is always a limit on time and resources. But where they will eventually settle is hard to tell. The administration’s plans have thrashed back and forth, like with the supposed agreement between the U.S. and China turning into charges by each that the other had breached it. The latest word on Monday, as Reuters and others reported, was that Trump and Chinese President Xi Jinping would meet later this week.
There is much more to Trump’s policies than tariffs, like shutting down programs, pushing for tax cuts, and cutting staffing and spending. That creates another factor to monitor. “One thing to keep an eye on is the capacity of the federal government to implement a lot of the initiatives they would like to happen,” Smith said. “Who’s going to be available to implement the executive orders and legislation?”
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The changes are large, and while making policy through executive orders might be faster than legislation, it’s also been up for legal challenges. “You want to leave the door open for implementation happening at that same pace, but government being so large, there’s a lot to do and it becomes very, very granular,” Smith explained.
For example, the administration wants more timber production on federal lands. While the supply exists, Smith noted there are other limitations, like a lack of workforce and processing plants to make up the roughly 25% of U.S. supply that comes from Canada.
There will likely be shifts of responsibility down from the federal government to state and local governments, private companies, and individuals. An example is some critical data gaps facing CRE as the Energy Star program winds down.
Smith argues that some aspects of risk avoidance around emergency climate scenarios will fall on individual building owners and investors. “It’s going to take a more holistic strategy and more thinking on the private side. You have to look ahead,” he said.
And look at more than your own assets. “If those events do happen, your specific properties might be unaffected, but your community might be affected,” Smith added. The federal resources that might have backed up restoring local services might well be unavailable now.
CRE professionals should focus on scenario planning. “It can be done by anybody, even in a very simple format,” Smith said. Identify weaknesses and strengths, aspects of a business where a company can pivot, and to areas where pivoting will be harder.
“Learn what you can control where there’s better visibility on issues,” he added. “Just having visibility on what you know, what you don’t know, and leveraging expertise of specialists in the space” can offer great help.
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