Trump Tariffs Trigger Building Material Stockpiling

With Donald Trump’s proposed tariffs expected to take effect in the new year, the construction industry is proactively stockpiling building supplies.

The materials hoarding is expected to spur growth in the industrial outdoor storage (IOS) sector, Bisnow reported.

“Of course, this is great for industrial storage, because if you’re worried about 25 percent tariffs on Mexican goods or 60 percent tariffs on Chinese goods, you better buy your construction inputs, whether materials or equipment, now and store it,” Anirban Basu, the chief economist for Associated Builders and Contractors told the outlet. “Otherwise, if you wait, you’re going to pay a lot more.”

Industries across the U.S. are scrambling to prepare for Trump’s proposed tariffs, which include 25 percent on all goods from Mexico and Canada, two of the U.S. most significant trading partners for lumber and construction supplies, according to the outlet. Ports are seeing sustained surge of activity as businesses rush to bring in stock before Trump takes office, Bloomberg reported.

“It’s hard to see in the macroeconomic data, but I’ve certainly talked to contractors who have told me that they’re stockpiling equipment ahead of time because they’re worried about the tariff,” Basu told Bisnow. “There’s no question there’s been some response.”

Stockpiling in the face of tariffs was also a feature of the first Trump administration. Major users of Chinese structural steel hoarded it when Trump instituted a 25 percent tariff on the material in his first presidency, leading to a boom of a demand for storage. Matt Hunsucker, founder of the newsletter IOS List, said IOS plays a crucial role in real estate’s supply chain but is itself in low supply.

“IOS is being zoned and re-developed out of existence, slowly reducing supply of suitable storage yards over time,” Hunsucker told the outlet.

But contractors are likely going to need large stores of materials to make the projects they’ve committed to pencil out.

“The issue here is not so much timeline necessarily, as it was in the past when we had those supply chain issues,” Basu told Bisnow. “What [contractors] don’t want to have is, ‘I’ve given a fixed price and now my materials cost or equipment costs go up because of tariffs. And now this project that was supposed to make me money is going to lose me money.’ That’s not an acceptable outcome.”

–– Kate Hinsche