Uncertainty surrounding the evolving tariffs environment is a chief concern as businesses in the commercial and construction sector try to develop strategies for navigating a path forward, industry experts said.

The U.S. enacted tariffs on Canada, Mexico and China, saying the tariffs were needed to combat illegal immigration, to stem the flow of fentanyl across the borders, and to strengthen the country’s economy. The tariffs were met with retaliatory tariffs on U.S.-made goods, and last week the U.S. followed with additional tariffs on steel and aluminum from Canada.

That economic muscle-flexing is causing unease as it is, preventing businesses from setting a strategy for moving forward, said Michael Macri III, an adjunct professor in the Iowa State University College of Design’s Community and Regional Planning Department and vice president with brokerage firm CBRE.

“What’s happening in the commercial sector right now is businesses are trying to find some level of stability and just understand what that’s going to be,” he said. “It’s changing so fast and the retaliation on the tariffs whether it’s coming from Canada, Europe or other countries is happening seemingly by the hour that businesses can’t respond in a way that is accurate for their business.”

The evolving tariff climate is detrimental for a company trying to run its business and develop a strategy to address customer demands, Macri said.

He said it is important to not focus only on the effect tariffs will have on a specific product but also on how the tariffs affect the costs of components used to make that product.

“There are so many components that go into the manufacturing process and that go into construction that it’s not just a matter of inputs on steel for a building,” Macri said. “The inputs that are affecting construction are having a multiplier effect on the business community. There are hundreds of different components that are coming from all across the world that are affected differently.

“So those parts and those materials within a finished product may cross the border with Canada and the U.S. six times before there’s a finished product that the consumer gets. And that has a major effect when you’re looking at a tariff on an individual component going back and forth over and over again,” he said.

How the tariffs affect the supply chain has yet to be determined, he said.

Macri said businesses should look back to when the first Trump administration enacted tariffs on China in 2018-19 as they begin to form a strategy for adapting to the current environment.

“I would expect that over the next two years there will be increased demand for certain products, increased demand for space, and you’re going to see those things continue to increase,” he said. “It’s not a flat demand curve. It’s going to be lumpy.”

Macri also said there are already signs of companies beginning to pull production from overseas back to the U.S., but that the benefits of those reshoring efforts won’t be felt immediately.

“If we look back at what happened in 2018 and 2019 when we went through tariff uncertainties, it took six to 18 months before we started to see the net effect of those shoring efforts really hit the U.S.,” he said.

Macri said the construction industry could be especially hard hit by the tariffs.

“Not only steel but aluminum for wall studs for commercial properties. They are going to be affected,” he said. “Steel beams for construction will be affected. Wrought iron and rebar for concrete. That’s going to be affected. You’re going to have price increases for steel gutters. You can just go down the list of individual components that will be affected by these types of economic shocks.”

Liz Arntzen, a project engineer with Henning Cos., said the effect of the tariffs on the price of building materials is a big concern for the construction industry. Henning Cos. serves the commercial, industrial and agricultural sectors, according to its website.

“Canada is the largest importer of steel to the U.S., and we did see in 2018 some of the impact that had on our prices, so steel and aluminum are really what we’re looking at right now,” Arntzen said. “We’ve already seen steel prices increase as a preliminary reaction to what happened [last week] and we saw prices increase before that.”

Arntzen said if the industry looks back to 2018 as an example, prices likely will gradually fall over a few months, but there could be short-term big purchases before the full effect of price increases are felt. Others may wait to make big purchases, which she said could slow down construction activity.

If companies buy up materials before the full effects of the tariffs are felt, that could increase lead time for projects, she said.

“With a few buildings you may have gotten in with your supplier and got those ordered, but if you didn’t jump the gun a little bit you might be out of luck and you might be waiting a longer time to get materials,” Arntzen said. “You could also see longer lead times due to the fact that building manufacturers might be trying to find other steel suppliers, so if you are used to using one building manufacturer and they’re used to using one steel supplier, there is that potential to shake up the supply chain a little bit.”

Arntzen said Canada is also a big supplier of lumber, and that the tariffs could affect residential construction as well.

She said she expects a slowdown in commercial activity as companies navigate the effects of the tariffs in the coming months.

“I think overall people are going to be playing the waiting game and we might see a slowdown in commercial real estate and commercial construction,” Arntzen said.

She said the changing tariff climate also makes it difficult for projects to move forward.

“It is difficult when you’re trying to put projects together,” Arntzen said. “It makes it extremely difficult to plan when you know you can only communicate so much to somebody that wants to build. There’s only so much that you can promise them right now. We want to be able to say we can lock in a building at this price, but we don’t know if we can do that because we don’t know what’s going to happen tomorrow.”

She said that unless a company has price guarantees from suppliers to protect it from increasing prices, it will be difficult to make projects work financially.

Macri said the first step business leaders should take in navigating their next steps is “take a breath.”

“Take a step back and evaluate what is directly affecting my business right now. What do I think is going to be a long-term effect versus a short-term effect, and how do I stabilize my business in the short term, and what do I need to do in the longer  term to mitigate or benefit from the effects of what’s happening right now, and how do I adjust to make the corrections?” he said. “The problem is they’re having to analyze and make a pivot every six hours. Until that stabilization happens and they are comfortable with a strategy moving forward, they will stay in that analyzation phase.”