Why The Trade War is Threatening Nashville

As you may know by now, there is a pending Trade War between the United States and many other nations - especially China - when it comes to our imports and exports. We import much of our steel and other construction-related necessities from countries like China and Germany.

The Trump Administration has threatened a 25% tariff on foreign steel and a 10% tariff on aluminum. Steel roughly accounts for 14% of building costs in a Commercial Project, but that alone could slow construction for Commercial Real Estate projects over the upcoming years thanks to the massive rise in material costs.

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This tariff, alone, could cause a massive slowdown to Nashville’s booming expansion - an upswing that we’ve ridden for nearly the last decade.

In 2018, the United States imported 30.8 million metric tons of steel from the rest of the world. That steel is now in buildings all over the United States, and plays a very important role in commercial and high-rise construction in Nashville. When materials become more expensive to import, those costs are passed on to consumers who may not have the buying power to afford them, which could cause our expansion to slow significantly.

According to the Tennessean, they say, “Executives from six area companies employing more than 1,000 Tennesseans described the significant price increases on steel, both domestic and imported, that they said are impairing their ability to compete against foreign companies.”

They go on to say steel has increased by “43 percent since this time last year.”

Executives from Nashville and other parts of Tennessee have written and signed a conjoined letter to President Trump to state their worries about the tariffs.

And rolled steel is already roughly $640 per ton, and over the next few months is projected to rise due to these tariffs.

Here at The Cauble Group, we have a handful of properties that are “Build to Suit.” Every day in Nashville there is new construction being built. These projects are now costing more money to build due to the higher prices of steel, aluminum and lumber.

With rising construction costs, out of the ground projects become a higher risk for investors & developers who are likely to reconsider their plans or put projects on hold completely.

This means some projects in Nashville could be slowed tremendously over the upcoming months if the trade war continues.

Steel and aluminum aren’t the only materials affected by these tariffs, but a multitude of other goods are being tossed in the mix, such as electronic circuit boards and other necessities in a Commercial Project.

It’s apparent that these tariffs could cause a negative ripple in our economy, just as they’ve caused issues in the U.S. Economy and stock market over the past few days. In short, not only are these impositions against other world powers short-sighted, they could cause damage to Nashville’s real estate boom and our country’s current prosperity.