Talking Tariffs: Developers On Alert, But Not Panicking

Steel is by far the most popular material for the construction of self-storage facilities because it's durable, economical, and fire-resistant. So, when President Trump began talking about potential tariffs on goods from other countries, some in the industry were legitimately concerned. It came to a head on February 1, when he ended weeks of speculation by announcing 25 percent tariffs on all imports from Mexico and Canada (other than energy resources) and 10 percent tariffs on all imports from China. The headlines regarding the decision came fast and furious. The Wall Street Journal’s editorial board eviscerated the tariffs decision in a column on Saturday titled, “The Dumbest Trade War in History.” 

“Most of the media outlets were talking about how the sky was falling,” says Travis Morrow, President of National Self Storage. “A few caught on that this was likely all a bargaining tactic, and so far with the exception of China, it has been.”

Of course, late on the morning of February 2, 2025, things changed (or were at least put on hold) as it was announced that the imposition of tariffs on imports from Mexico and Canada would be suspended by 30 days (tariffs on Chinese imports would proceed as announced). According to experts, the objective of the tariffs was “to strategically meet the goals of Trump’s foreign policy and domestic policy, and that was to stop the flow of the illegal drug fentanyl into the United States,” Al Jazeera’s Kymberly Halkett reported from the White House. The Wall Street Journal had also had a new outlook on the matter, releasing the story “Trump’s Tariffs Are Art of the (Temporary) Deal,” a nod to his book.

The deal? After speaking with Trump, Mexico’s President Claudia Sheinbaum announced the deployment of 10,000 National Guard officers to the border to curb drug trafficking and migrants into the US, while Canadian Prime Minister Justin Trudeau agreed to send forces to the border to fight drug trafficking and undocumented migration.

“Tariffs are a concern, but right now I think it’s more saber rattling versus reality,” Tarik Williams, CEO of TLW Construction, told MSM last week. So far, at least when it comes to Mexico and Canada, it seems he was right.

Ted Culbreth, VP of Sales and Marketing with SBS Construction, also didn’t seem overly concerned, though he acknowledges that most steel comes from other countries so there is some worry. “We went through this during Trump’s first round when he put 25 percent tariffs on steel from China,” recalls Culbreth, referring to Trump’s two-year trade war with China that began in 2018. At the time, he imposed tit-for-tat tariffs on about $50 billion worth of Chinese imports. To end that trade war, China agreed in 2020 to increase its annual purchases of US goods by $200 billion, but the plan was disrupted by the Covid pandemic when lockdowns resulted in a collapse in goods trade globally. Continues Culbreth, “Developers found a way, and they will again regardless of what happens this time.”

“The price of supplies has been declining which is great, so everyone in the supply chain is a little nervous about these tariff talks,” says Nicholas Bergmann, COO of Capco General Contracting. He also brings up the China trade war from Trump’s first presidency. “The tariffs Trump instituted on China back then, combined with the high demand for self-storage during Covid, drove up steel prices. And, American companies can’t produce enough metal to support the entire country. It’s being used for auto manufacturing, appliances, and many other industries, not just self-storage. So we all wound up fighting for raw material.”

Bergmann says that this time around, should the tariffs become a reality, it may not be as bad. “Demand isn’t as strong as it was years ago, and construction costs are coming down. Hopefully, if prices do increase it won’t be as significant or as volatile.”

Still, Bergmann says the threat of tariffs means it is important to proceed with caution. “We need to communicate with suppliers and contractors, because when people are prepared, they can manage. What hurt us before was we weren’t prepared.”

Kris Bennett, host of The Storage Investor Show, says that if the Trump tariffs go into effect in Mexico and Canada, it will definitely reshape the market. “If we have rising costs then we'll have inflationary pressure and higher interest rates that remain longer,” explains Bennett. “That’s going to spell some trouble down the road, but we’ll just have to wait and see. We have to adapt and be prepared. We may see less development, we may need to go after more acquisitions of stabilized properties and put lower leverage on them, and we may need to hold them for a bit longer as we ride out this wave.” 

“We’ll see how things play out,” concludes Morrow. “Right now, I’m glad you’re just reporting the facts, not sensationalist headlines like the other MSM.”

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Brad Hadfield is the MSM website manager and a news writer.