Why Trump’s tariffs could have ‘bigger impacts’ this time around
“My biggest concern here is how and when does this end?” David Greek, managing partner of Greek Real Estate Partners, said of U.S tariffs on Canada, Mexico, and China.
President Donald Trump’s new tariffs on Canada and Mexico — as well as additional levies on China — have rattled financial markets and deepened geopolitical tensions with America’s biggest trading partners.
Trump’s 25% tariffs on imports from Canada and Mexico took effect Tuesday, prompting vows of retaliation from those countries. The president also doubled the tariff he announced last month on Chinese products to 20%, which led Beijing to push back with its own levies on U.S. farm products.
The president has said tariffs could help nudge those countries to stem the flow of illegal immigration and fentanyl into the U.S., while also arguing that his trade measures will force U.S. businesses to manufacture their products at home.
His administration has hinted Trump may dial back his trade measures as early as Wednesday, with Commerce Secretary Howard Lutnick telling Fox Business on Tuesday that the president will “probably” announce compromise deals with Canada and Mexico.
Trump made no such overtures during his address to Congress Tuesday night, however. “Tariffs are about making America rich again and making America great again,” Trump said in his speech. “And it’s happening. And it will happen rather quickly. There’ll be a little disturbance, but we’re OK with that. It won’t be much.”
The tariffs are affecting businesses that have grown accustomed to the free flow of goods in North America. The Inquirer spoke with logistics industry executive David Greek, managing partner of Greek Real Estate Partners, on Tuesday afternoon to get a snapshot of how the trade war is playing out on the ground.
“My biggest concern here is how and when does this end?” said Greek, the company’s managing partner. “I don’t feel like there’s been any clear signal … from the White House as to what exactly they want to get out of these from the opposing trade partner.”
Greek’s East Brunswick, N.J.-based company develops, owns, and operates warehouses in New Jersey and Pennsylvania, with 23 million square feet of commercial real estate under management — equivalent to about half the size of Center City Philadelphia’s office market. Tenants range from Target and Amazon to “boutique mom and pop service companies that might clean your gutters and everything in between,” he said.
This interview has been edited for length and clarity.
What impacts have you seen from the tariffs that took effect Tuesday and the earlier ones announced on China?
First off, it’s really early to try and measure any effects of this, but we are seeing a little bit of impact already. One thing that I’m paying very close attention to is the price of building, and we are somewhat concerned that the tariffs on Mexico and Canada in particular are going to create some negative volatility in the price of steel and lumber, as well as some of the smaller components of building, such as electrical components.
A lot of this was kind of telegraphed to the market and anticipated for a long time. And I’m a pretty solid free trader, so I’m not in favor of tariffs in any form. But I would say, if you had to put a silver lining in all this, it is that they’re finally here, and we can stop speculating about what they might be.
What I’m hearing from a lot of tenants is … simply this cost is just going to be passed along to the next guy in the chain, and that, ultimately, probably the consumer will bear the brunt of price increases here. But again, it’s early on.
But there could be more tariffs to come on other trading partners like the European Union, right?
There’s still a lot of fear out there that this is not it. And that some of this is just the opening salvo. But I do get a sense of relief from some of the industry, particularly some of our tenants that rely heavily on imports that at least they know for the next couple weeks, for the next couple months — this is in place, and this is how it’s going to work. And they can plan around that, as opposed to just trying to anticipate something that they didn’t know much about.
What did you learn from Trump’s first-term tariffs?
There’s kind of a classical economics, economist way of looking at tariffs, that they have this kind of immediate impact on consumer pricing. And the reality of Trump’s first term was that connection was not quite as strong as theory would suggest.
And the pricing changes took longer to get integrated into the system than what most economists anticipated. So that’s one of the reasons why I’m talking with a lot of caution. The amount of time it takes the economy to price these things is significantly longer than what we had assumed it was.
A lot of [Trump’s first-term] tariffs were kept in place by the Biden administration. And in large part, the market has just adjusted and grown around that.
The tariffs that we’re seeing in the second Trump presidency are a little bit different, a little bit more drastic, and from what I’ve seen so far, much less targeted. They are much broader, and so they have the potential to have bigger impacts.
The president has given multiple explanations for why the tariffs are needed, so it’s hard to know how the trading partners can address his concerns.
The current administration’s messaging has been a lot about reviving American manufacturing, reviving the domestic supply chain, and doing that by creating protectionist barriers.
Particularly in a place like Philadelphia or New Jersey, we know that these kinds of big macroeconomic projects, when it dials down to the local level, things get very complicated. Things take a lot longer to build to get operational than what the larger public thinks.
If the true goal of these tariffs is we’re going to keep them in place until we’re happy with the revival of American manufacturing, then I think this could go on indefinitely.
That is something that I’m trying to interpret from some of the statements the White House has made: What are they looking to get out of these? Is this going to result in a revised trade deal with Canada and Mexico, or is this really going to be built into long-term structural changes in how we trade with them?