Trepp | Supreme Court Tariff Ruling: Implications for Commercial Real Estate

The Supreme Court’s decision limiting the administration’s use of the International Emergency Economic Powers Act removes the emergency-based foundation of the recent reciprocal tariff structure while leaving other statutory tariffs in place. The ruling effectively lowers the overall tariff burden, pushing the estimated effective tariff rate from 12.7% to roughly 8.3%. It also leaves unresolved whether more than $175 billion in previously collected duties will be refunded, introducing a question that may take time to sort out materialize.

Markets responded in line with expectations for a ruling that lowers the tariff burden but leaves meaningful policy uncertainty in place. Retail and industrial equities moved higher on the prospect of reduced import costs, and investors began reassessing supply chain dynamics. Treasury yields rose following the announcement, with the most pronounced moves at the long end of the curve. That reaction reflects both the potential fiscal implications of lower tariff revenue and uncertainty over how the administration might reconstruct parts of the tariff framework, prompting investors to demand a slightly higher term premium.

For the commercial real estate (CRE) market, the tariff regime had been most visible through elevated construction costs and thinner development project feasibility. Industry estimates indicate that tariffs increased commercial construction project costs by approximately 4.6%¹, disproportionately affecting steel-intensive projects². With the effective tariff burden now lower, some of this pressure should unwind. As materials pricing normalizes, developers may find marginal projects returning to feasibility, improving the flow of construction lending, and selectively reviving stalled pipelines.

The effects may also vary across property types. Industrial markets tied to port activity may see steadier demand, though the timing depends on how quickly firms adjust pricing and supply chains. Retail tenants, who absorbed higher input costs throughout the tariff period, could benefit from improving margins, which may help reduce occupancy risk as the year progresses. On the macro front, Oxford Economics estimates that a sustained reduction in tariff rates, absent policy replacement, could add roughly 0.1 percentage point to 2026 GDP growth³. Households may see savings of $600–$800 in 2026 as import prices adjust⁴, providing modest support to consumer-facing CRE segments and reinforcing stability in markets reliant on local spending.

Trade policy uncertainty, however, remains a nontrivial factor. The administration retains several legal mechanisms to reconstitute portions of the tariff framework, and the speed and composition of that response will influence how quickly CRE markets absorb the ruling. Still, the decision removes a meaningful cost overhang and nudges the development environment toward somewhat firmer footing as 2026 progresses.

1. Cushman & Wakefield,

2. KOW Building Consultants

3. Oxford Economics

4. Yale Budget Lab

Author:
• Rachel Szymanski, Chief Economist, TREPP

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