The past few days have been a whirlwind for the business community, awaiting to get clarity on tariffs. It started with the Supreme Court ruling that President Trump could not use the International Emergency Economic Powers Act to justify the levies.
The initial reaction of those in commercial real estate was hopeful.
"With the U.S. Supreme Court ruling that tariffs imposed under the International Emergency Economic Powers Act (IEEPA) exceed presidential authority, the decision restores a measure of predictability to U.S. trade policy — easing pressure on supply chains and reducing costs for businesses," said Avison Young's Chair and CEO Mark Rose in prepared remarks.
"For commercial real estate, this may temper some of the urgency surrounding reshoring initiatives, but it simultaneously supports broader economic stability, which strengthens demand across industrial, retail, and office sectors."
However, the bullishness didn't last long, as the Trump administration followed up with various executive orders, ending some tariffs "as soon as practical" and explicitly leaving in place those that depended on other legislation. The suspension of duty-free de minimis treatment for all countries continues.
Under other legislation, Trump instituted a 150-day 10% tariff on all countries because of "fundamental international payments problems, such as large and serious balance-of-payments deficits, an imminent and significant depreciation of its currency in foreign exchange markets or an international balance-of-payments disequilibrium."
There were exceptions, including critical minerals and metals, passenger vehicles, some aerospace products and items that are compliant with the United States-Mexico-Canada Agreement (USMCA).
Then he raised the global duty to 15% on Saturday.
"Section 122 of the Trade Act of 1974 could be used to reinstate reciprocal tariffs at a 15% rate for as many as 150 days. It can be done via proclamation, and would then require congressional action," says Holly Froum, litigation analyst at Bloomberg Intelligence.
She added: "Section 338 allows levies at a rate of 50% by proclamation when countries are found to discriminate against US commerce. Case law is mixed on whether congressional approval is needed on trade deals, though we doubt countries that have entered into them will withdraw due to the ruling.
Then, other sections of the law allow tariffs to be imposed for the breach of trade agreements and trade investigations into specific sectors, according to Froum.
New legal challenges, including lawsuits from many companies seeking compensation for the now-illegally collected tariffs, seem a safe bet. So are the impacts on CRE due to continued uncertainty.
"In the last 18 to 24 months, the tariffs on imported goods have been real," Jeff Klotz, CEO of The Klotz Group of Companies, a private equity real estate firm, tells Globe St.
"Steel, aluminum, certain lumber products. Then you factor in that you can't lock in pricing, you can't buy out certain divisions of trades or pricing. There's so much volatility, suppliers and vendors can't commit."
For now, it looks like the tariffs aren't going away for a while, even after the Supreme Court ruling.
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