Trump May Ease Metal Tariffs, Offering CRE A Breather On Build Costs

President Trump is reportedly preparing to roll back portions of the steel and aluminum tariffs, according to three sources cited by The Financial Times.

For commercial real estate (CRE) owners, developers and lenders, such a move could mark an important shift in materials pricing and overall project feasibility — particularly for metal-intensive asset classes such as industrial facilities and large-format properties.

Sources indicate the administration is reassessing the list of products subject to tariffs of up to 50 percent. Originally imposed last summer and later expanded to include a wide range of downstream goods — from appliances to everyday household items — the levies have significantly broadened in scope.

Officials are now expected to exempt certain products, halt further expansions of the tariff lists and instead rely on more targeted national security investigations into specific imports. Trade authorities at the Commerce Department and the Office of the U.S. Trade Representative have reportedly concluded that current tariffs are increasing prices on goods such as pie tins and food and beverage cans, contributing to affordability pressures for American consumers.

For the CRE sector, the impact has been direct. Steel and aluminum are central to construction inputs, including structural framing, roofing systems, cladding, mechanical equipment and numerous components used in tenant improvements. Industry research suggests tariff-related metal price increases have driven mid- to high-single-digit percentage increases in total project costs when fully applied. Those added costs have translated into higher contractor bids, tighter contingency budgets and, in some cases, postponed or canceled developments as project sponsors reassess returns under elevated cost assumptions.

While selective tariff relief would not immediately reverse these pressures, it could help stabilize material pricing and reduce volatility for projects currently in planning or pre-construction phases. Greater predictability in trade policy — and a narrower, clearer list of affected products — could improve underwriting confidence for long-duration developments.

The burden of metal tariffs has been especially pronounced in sectors that are highly materials-intensive, including industrial warehouses, manufacturing plants, data centers and big-box retail. In these asset types, steel and aluminum represent a substantial portion of structural and systems costs, leaving projects particularly exposed to swings in import pricing and tariff classifications. Some developers have responded with higher contingencies, value engineering measures or phased construction strategies to manage risk.

Beyond construction, tariffs have also contributed to broader affordability pressures affecting tenants and consumers. Higher costs for packaged goods — including canned food and other everyday products — compress retail margins and strain household budgets. In turn, this can influence rent growth, occupancy levels and expansion decisions among retail and service-oriented tenants.

Moderating tariffs on widely used metal products could therefore provide incremental relief to consumer-facing businesses and, over time, support demand across shopping centers, neighborhood retail and certain mixed-use properties.

Currently, much of the tariff system operates through a Commerce Department “inclusion” process, which allows U.S. companies to nominate foreign suppliers and products for duties. The result has been a broad and at times inconsistent list of covered items. One European executive told The Financial Times that a company shipping four identical containers of machinery to the U.S. was charged different tariff rates on each — highlighting the administrative complexity importers face.

Under the existing framework, domestic companies have frequently petitioned for tariffs on steel and aluminum products from foreign competitors, citing national security concerns. The Commerce Department has approved many of these requests, extending duties to a diverse array of goods ranging from bicycle components to cake tins and mattresses.

The outcome has been a patchwork tariff structure that some officials now view as overly complex and difficult to administer consistently — prompting efforts to streamline and clarify the system.

Compounding uncertainty, the Commerce Department’s most recent nomination round — launched in October — failed to meet its 60-day review deadline. Nearly 100 filings were submitted, spanning numerous industries asserting national security relevance. One applicant even argued that without bread and similar baked goods, U.S. soldiers could not maintain a healthy diet.

As the administration weighs adjustments, commercial real estate stakeholders will be watching closely. Even modest tariff recalibration could meaningfully influence construction budgets, tenant demand and long-term investment decisions across the sector.

Source: GlobeSt