T
he Trump administration's latest trade salvo has sent shockwaves through the construction industry, leaving developers scrambling to adapt to a new reality of escalating costs. The 10% tariff on all imports, coupled with steeper penalties for specific countries like China and the EU, has already led to a freefall in stock prices and a surge in material costs.
Developers are bracing themselves for the inevitable price hikes that come with tariffs, which ultimately fall on consumers. "We're seeing higher materials costs across the board," said Andrew Till, COO at Baron Property Group. "Even Kohler is increasing prices - we got a call last week to order a building by Wednesday, but on Friday they were already raising their prices."
The impact of tariffs has been particularly pronounced in the glass industry, with prices expected to climb by up to 30% due to the new duties. This could have significant implications for office developers who rely heavily on glass and steel in their designs.
"Glass is one of the biggest expenses in an office project," said Eli Moyal, founder of Chapter design-build company. "A 20% increase in glass prices can add up quickly - we're talking $150,000 to $200,000 per project."
Avdoo & Partners Development CEO Shlomi Avdoo is already feeling the pinch, with his company relying on imports from Portugal and Turkey. The EU's 20% tariff has left him wondering how the costs will be split between manufacturers, vendors, and ultimately, consumers.
"It's a game of hot potato - no one knows where the burden of these increased costs will land," Avdoo said. "We're in limbo, waiting to see what happens next." The uncertainty is palpable, with developers like Avdoo struggling to navigate the complex web of tariffs and trade policies.
As the real estate market grapples with this new reality, one thing is clear: the burden of these increased costs will ultimately fall on consumers. "It's a situation where that cost could be shifted over - potentially - to the buyers," Avdoo said, highlighting the uncertainty that has become the hallmark of Trump's trade policies.
