It depends on whether the EPC firm in the project had pre-negotiated their steel purchases. If the steel has yet to be procured then yes there could be a change to costs. Steel tariff is 25%. Where is the steel in your deal sourced? If it is from US, Canada or Australia then it should not have any impact. If not, then yes it could have an impact.
How will President Trump’s new steel and aluminum tariffs impact new construction?
We are looking at being a potential LP investor into a large ground-up industrial complex development. We like the deal based on the underwriting we performed two months ago. However, we are wondering how much we need to adjust those calculations based upon the new tariffs? How much will new construction be impacted?
The short answer is that no one knows. Since the President's pronouncement, there has been more speculation and little specific. I assume that there will be an increase in prices and would factor that into my calculations. I would ask the GP to provide their best guess; they are in the business.