Trump’s Tariff Turmoil

How the President’s Unprovoked Trade War Is Bound to Raise Prices, Stoke Chaos, and Hurt the Building Trades — and Everyone Else

To attempt to summarize President Donald Trump’s recent tariff actions would be an act in futility. As soon as these words have been typed — let alone published — the rules of the game will have changed, likely multiple times. Tariffs against our closest trading partners. Tariffs against everyone. A pause on most tariffs, except for reciprocal tariffs. And enormous tariffs against China, for now. They’re all the norm. Maybe. Also, maybe not.

The result of this chaos has been a stock market with more ups and downs than a Six Flags ride, heaps of economic uncertainty, and, coming to a store near you, higher prices for pretty much every conceivable consumer good.

How will Trump’s wild tariff ride affect the building trades? This month, we take a close look at the ugly possibilities.

Photo Illustration: Paolo Manuel

Developer Oz Erickson of the Emerald Fund is in the home stretch of a small project in Pacific Heights with high-end fixtures imported from Italy. Finishing costs run $450,000 per 3,600-foot unit.

A 30% tariff will raise that per-unit expenditure by $130,000.

“It significantly affects your cost structure,” Erickson said. “If tariffs stay in the form that are proposed, they’re going to have a dramatically negative effect on the construction industry.”

Erickson offered another example: If a developer ordered a curtain wall for a new building from China due to arrive in the next two months, then what?

“I honestly don’t know what you’d do,” he said. “If you have a doubling of big line-item costs, I guess you would have to raise significantly more equity to pay for it. Returns go commensurately way down. You would have a non-economical project if you’re in the middle of it.

“I guess you have no choice. Somehow finish the project. If it’s something where you’ve just started and you’re in the ground, well, you just sit and wait.”

Erickson said that the “degree of risk now is very much heightened” with Trump changing his mind daily. 

“I think the tariffs will have a very negative effect on the construction industry,” he said.

The Uncertainty

Stanford economist Neale Mahoney said that with tariffs comes uncertainty in the form of costs. That uncertainty can lead to various project delays.

“The problem is that if everybody waits, you generate this self-fulfilling prophecy in that everybody pulls back on spending,” Mahoney said.

“I think the biggest problem for the building trades and the construction industry is the uncertainty that the tariff policy is creating with businesses and the economy,” said Enrique Lopezlira of the UC Berkeley Center for Labor Research and Education.

Lopezlira said that with so much up in the air, there’s a chance that projects might not move forward. That hurts workers.

He noted that 95% of the cost of tariffs gets passed through to consumers. Higher prices result in less spending. Less spending results in less production. Less production means fewer jobs, which means less spending. You get the idea.

IBEW Local 6 Business Manager John Doherty can make neither heads nor tails of what’s coming out of Washington, D.C., at this point.

“Who’s going to build a new building if they can’t tell you what rebar is going to cost on Tuesday or Thursday?” he said. “The time frame to open up a factory and to resource everything internally takes five years, sometimes longer. So, what are we going to do for five years? Not build anything?”

San Francisco Building and Construction Trades Council Secretary–Treasurer Rudy Gonzalez is worried about the downstream effect of Trump’s tariff policy. Stock market chaos directly affects members’ pension investments and retirement funds.

“There are massive investments, and those investments are taking losses with the kind of whipsawing or whiplash effect that’s happening in the stock market,” Gonzalez said. “It’s problematic right now, and it’s going to be problematic for a long time. If the Trump administration doesn’t back off of this trade-war posture, working people are going to get squeezed the most out of this now and later.”

In addition to projects that are in development or have broken ground, Gonzalez is also concerned about public projects facing headwinds from a hostile administration in Washington.

“We went from the boldest, most pro-worker, pro-union administration in many of our lifetimes, to one that completely thinks high-speed rail is a sham,” he said.

Low Road to Nowhere

According to labor researcher Lopezlira, half of construction workers rely on public programs to make ends meet, especially in the residential world.

Developers could cut costs incurred from pricier materials by leaning on labor. Lopezlira said that the Trump administration’s attacks on the National Labor Relations Board and decimation of the U.S. Department of Labor make combating bad actors even harder.

Gonzalez has a clear message for any possible shenanigans.

“I think there are low-road contractors and low-road developers who would happily cut corners and try to control costs on the backs of our members,” he said. “We’re not going to let that happen — not on my watch.”

Instead, Gonzalez and Doherty champion union construction workers’ skilled-and-trained expertise as key to efficiency and cost savings.

“I can confidently go to a developer and show them that, actually, if they’re looking to control costs, it’s all the more reason that they should partner with our trades council, execute a project labor agreement, and employ the highest-trained, best workers who can bring them the highest value to their project,” Gonzalez said.

Added Doherty: “You’ve got to do it right the first time. You’ve got to get it done with the first shot.”

Moving Forward

“He’s living in some sort of fantasy world that, up until 1913, everything was hunky dory,” Doherty said of Trump. “It was miserable for working people. They lived in tenement housing. They lived hand-to-mouth.”

Economist Mahoney recalled the Smoot–Hawley tariffs of the 1930s that exacerbated the Great Depression as a historical precedent to the current tariffs.

“Those are, I think, largely seen as the biggest economic mistake the United States has ever made,” he said.

Mahoney believes that the economy can withstand a slowdown without tipping into recession. He said that tariffs are part of the economic policy toolkit, but are a blunt instrument. He also pointed out the conundrum the Federal Reserve faces with interest rates. Tariffs will likely bring higher prices, suggesting higher interest rates to control inflation.

Tariffs are also likely to create an economic slowdown, suggesting lower interest rates to stimulate the economy.

It can’t be both.

Mahoney also said that the volatile stock market might be a harbinger.

“That’s sort of the canary in the coal mine,” he said. “There are also people behind the canary.”

So, what to do moving forward?

“I think that his approach with the tariffs is dreadful,” developer Erickson said of Trump. “I think he should go back to where he was and maybe sit down with China and other people like that and explore a more nuanced tariff approach.”

Lopezlira said that the easiest answer — but far from the easiest course of action — is organizing.

“We know that the public supports unions at a higher level than in the past,” he said. “People are feeling it, so I think that they’re receptive to the need to build power for workers.”

Erickson might have offered the most incisive summary of the situation.

“These tariffs are bad for the construction industry, bad for the development industry, and bad for construction union labor,” he said.

So, it’s unanimous: Everybody agrees that these tariffs are bad. Something’s got to give. Let’s hope that it does sooner rather than later.