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Massachusetts real estate industry executives saw encouraging signs from the Supreme Court’s Friday decision wiping out Trump administration-imposed tariffs on some building materials, but hopes for predictability over U.S. trade policy were promptly dashed by new tariffs announced over the weekend.
Tariffs on imported building supplies have heaped additional costs upon real estate projects already strained in recent years by higher prices and interest rates.
Friday’s court ruling struck down International Emergency Economic Powers Act (IEEPA) tariffs imposed by President Trump last April, which have created a “tariff fog” about subcontractors’ bids, said Marvin Lahoud, a partner at Woburn-based construction managers Tocci. They left in place others imposed under a different legal authority, including those on steel, aluminum and copper.
Lahoud estimated a typical 200-unit multifamily development would save up to $1 million, or up to $5,000 per unit, from the removal of the IEEPA tariffs.
But that estimate is predicated upon clarity on future trade policy, he added.
“If manufacturers update their quotes on supplies, subcontractors and contractors will be hesitant to lock that in, because they don’t know what’s going to happen in three months,” Lahoud said. “Is it going to come back?”
Trump administration officials indicated Monday they will seek to reimpose tariffs through other legal measures,
Trump also reinstated a 15 percent global tariff, under Section 122 of the Trade Act of 1974, which allows for tariffs for 150 days. Administration officials indicated they would seek to extend those as well behind the expiration date.
Trump’s response underscored industry organizations’ statements emphasizing that uncertainty over future tariff policy continues to inhibit investment.
The Real Estate Roundtable today released its first-quarter Sentiment Index, a measure of confidence among senior commercial real estate executives. The index declined 1 point from the fourth quarter to 66, as executives said tariffs continue to widen buyer-seller spreads and make price discovery more difficult.
The Greater Boston Real Estate Board responded to the ruling by praising the potential removal of a barrier to housing production.
“We are grateful to the Supreme Court’s ruling striking down the administration’s sweeping tariffs, which have impeded new construction and property maintenance due to cost,” CEO Greg Vasil said in a statement.
NAIOP Massachusetts declined to comment.
Avison Young CEO Mark Rose, in a statement issued Friday, said the Supreme Court ruling “restores a measure of predictability to U.S. trade policy – easing pressure on supply chains and reducing costs for businesses. 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.”
Tariffs remain at historically-high levels, even taking into account the potential removal of the IEEPA tariffs, according to the Budget Lab at Yale, a non-partisan policy research center.
U.S. consumers still face an overall effective tariff rate of 9.1, the highest since 1946, the organization reported.
Ratings service Morningstar said the Supreme Court decision “is unlikely to significantly change the medium-term fiscal outlook. This is primarily because we expect the Trump administration to reinstate tariffs through other legal channels.”
Softwood lumber – a major component of residential and multifamily projects – remains subject to a 10 percent tariff on Canadian imports. The effects have been limited, according to the American Building Materials Alliance, which declined to comment this week but issued a legislative update last fall saying steep price increases failed to materialize.
