"The intent of tariffs is to get the local steel manufacturing factories up and running. That's going to produce more US steel, which would be great, but that's going to take some time to do," Colon, who focuses on private and public construction deals, noted.

She warned, "We don't have enough steel production in the United States to cover our demand. So we look at Brazil, China, Mexico, [and] other places. [Plus,]Canada is a huge producer and supplier exporter of steel to the United States."

LARGER PROJECTS WILL FACE THE MOST IMPACT

If you recently completed a big project or are nearing the finish of one, consider yourself fortunate. Because these are the types of developments that will be most impacted by the tariffs, according to Colon.

"Any project that requires lots of steel; you think of mostly vertical construction, [which includes] apartment buildings, condo buildings, any office buildings, any big projects that the government has," she explained.

Colon pointed to Ken Griffin's Citadel project for a Miami headquarters as one that could see a big impact. The development, which has not broken the ground yet, is projected to cost at least $1 billion, according to The Real Deal.

Those working on smaller projects, meanwhile, might have an alternative to avoid higher costs. Shipping container projects, which can be transformed into commercial properties, can cost less. This strategy is often used to create affordable housing.

"I think developers who are doing that may have some flexibility, but definitely in the large commercial sense, there's not much alternative for steel, Colon said.

DON'T EXPECT IT TO CAUSE EXTREME VOLATILITY

The news comes as material costs were starting to stabilize. "Contractors, vendors, material suppliers, were holding their prices for longer," she said from her perspective of the South Florida market in recent months.

But in the near term, to no surprise, she expects that will change with the new tariffs going into effect. But on the bright side, the stock market did not have a big reaction to the news and she does not expect to see extreme volatility like we saw with the supply chains during and slightly after the pandemic.

Colon expects the new tariffs to remain in place. So it might be something developers are going to have to account for going forward. Plus, there's a chance that more tariffs get imposed. For example, Trump earlier this month suspended separate ones that targeted Canada and Mexico for at least 30 days. The tariff war is something Wall Street and the CRE industry will be paying close attention to in the short term.