“We believe that suburban multifamily construction projects may be most impacted by tariffs on Canadian imports given their greater proportion of wood frame deals than urban areas and the high proportion of lumber used in the construction industry that originates from Canada,” Brian Clement, senior vice president and head of acquisitions at LBX Investments, told GlobeSt.com.

However, there are already punitive tariffs on Canadian softwoods when in August 2024 the duty rose from 8.05% to 14.54%. The current spot price is $579 per thousand board feet. During the pandemic, prices hit nearly $1,500. Add another 11% and the price is still far less than it was recently. Similarly, during Trump’s first term, he sharply increased tariffs on goods from China.

Next, the potential deportation of workers. “The fact is immigrants contribute significantly to the construction industry and keep costs relatively low,” says Raul Gastesi, partner and co-founder of the law firm Gastesi Lopez & Mestre. “Reducing the available labor pool for construction will drive up the cost of labor, raising the cost of construction and thereby increasing the cost of purchasing real estate.”

Florida-based construction industry attorney Justin Zinzow, founder of the firm Zinzow Law, noted that an estimated 13% of the construction industry. “While it’s a hot-button topic and certainly being discussed in construction and development circles, I don’t think it’s going to have the negative effect that’s being gloated in the mainstream,” Zinzow told GlobeSt.com. “Many states, Florida being one of them, have strict immigration laws.”

This doesn’t mean there would be no trouble. Ryan Dossey, co-founder of brokerage SoldFast, remembers remodeling properties in Pensacola, Florida in 2023. He said that “when Governor Ron DeSantis first announced a law that would make it a felony to even give a ride to an undocumented worker, it definitely puts people on edge.” He said he saw entire renovation companies move north to Georgia.

“Our research indicates that 15% to 25% of the U.S. construction workforce is made up of laborers who lack permanent legal status,” said Clement. “Many of the Sunbelt markets — particularly those in Florida, Texas, and California — have a higher share of unauthorized workers in general, so we think it stands to reason that they also have a greater than average proportion of unauthorized workers within the construction industry.”

Michael Vardaro, managing partner of construction law firm Zetlin & De Chiara, told GlobeSt.com that the impact likely wouldn’t fall evenly. “I think maybe that’s a more important topic when it comes to residential construction,” he said. “But on the large projects we’re typically involved in, construction is super sophisticated, and you have construction workers that are highly skilled. It wouldn’t be a big deal for the big projects because the folks being deported aren’t in the labor unions and not doing that work. That might be different for smaller types of construction.”

That leaves the potential for higher inflation. If so, it could mean higher interest rates from the Fed, which influence the shorter end of Treasurys and construction and bridge loans. This is the cloudiest future to understand. However, after the pandemic, it seems unlikely the Fed would wait as long to address inflation, meaning perhaps a lower cap on how high rates would go.