Trump’s Planned Tariffs Could Be 'A Good Thing' For Manufacturing

The incoming Donald Trump administration putting a 20% tariff on all products  imported into the country could end up being a driver of more manufacturing in Dallas-Fort Worth, supercharging a trend of foreign companies looking for plant space in the Metroplex, according to industrial brokers.

An unnamed Chinese manufacturer looking to open a 400K SF plant in North Texas came across the desk of Champion Partners co-Managing Partner Steve Modory as a prospect in the weeks leading up to Tuesday’s election.

“They felt like [opening a plant in DFW] would have a lot more traction internally if Trump did put tariffs on goods coming in because it's going to force some of these foreign companies to have to put their manufacturing in the States,” Modory said Wednesday at Bisnow's DFW Industrial Outlook event, held at Inbound on Inwood in Farmers Branch. “So it could be a good thing.”

Texas is far better positioned to benefit from the changes expected to be made by the Trump administration than any other state, Modory said.

Laredo, Texas, became ground zero of the nearshoring boom in the wake of the pandemic. Dallas has picked up an outsized piece of that in the years that followed.

“There's going to be great opportunities here, not just the next four years but the next 10 to 20 years,” Modory said. “We'll continue to be the place capital is going to want to come to [and where] companies are going to want to come to.”

That kind of nearshoring and reshoring of manufacturing is something Ronald Rohde Law President Ron Rohde said DFW is likely to see more of due to Tuesday’s election results — and that could have an impact on the state's fragile power grid.

“Manufacturing users have tremendous power requirements that are much greater than the traditional distribution user,” Rohde said. “How that percentage grows, both on a spec builder as well as just retrofitting distribution, that’s going to materially impact how much power tenants or users need in Texas.”

Lower regulations and taxes could create an environment that is beneficial to commercial real estate, Crow Holdings CEO Michael Levy said. But the Republican Party’s policy on tariffs could have repercussions, he added, and there is a distinct possibility the U.S. could end up in a tariff war.

“The strength of our economy has grown so much … that I think it would be naive to think that other countries are just going to sit by, but this is just unknowable,” Levy said. “It's not economics for the sake of economics. This policy clearly is economics for the sake of security. It could get ugly or it could be just fine. I don't think any of us know the answer to that.”

Capital structure in industrial real estate has been in flux for a while, but Basis Industrial President and Managing Partner Anthony Scavo said it will change even more after Trump won another term as president. Before Tuesday’s election, Scavo said he was bullish on interest rates continuing to drop, but now he’s not so sure. 

With the prospect of a Republican in the White House and a GOP-controlled Congress, M2G Ventures co-founder Susan Miller said she is curious to see whether Republicans will be able to push policy through quicker. However, that could have its downsides, she said, noting CRE’s financial markets are very sensitive to any fiscal policy changes.

“Over the next three to six months, it probably will be bumpier, with an overall sentiment toward the markets opening back up,” Miller said. “The Treasury system will continue to be volatile, which is a challenge to all of us.”

Hillwood Properties Executive Vice President Tom Fishman said he has seen that volatility. Now that the election is settled, he is hopeful there is a path that should calm things down for the industry.

“Zero percent was great, but it wasn't healthy in the long term,” Fishman said. “We need to get used to this new environment where there's going to be interest rate costs. They're not going to be cheap.”

Presidential election years have long been used as a reason not to move forward on a real estate deal, Ryan Cos. South Central Region President Jeff Thornton said. Thornton had been worried about the election dragging on, but the decisiveness of Tuesday’s results gave him confidence that the industry is ready to move forward.

“Sure, there's going to be some choppiness going forward, but I'm looking forward to more swift and decisive user decision-making in the real estate market,” Thornton said. “That's going to benefit us all.”

So far, 2024 hasn’t been the busiest year for Colliers Senior Vice President Allyson Yost, but she said she is also awaiting quicker decision-making now that the presidency is decided. She also said the U.S. trucking industry, which has a large presence in DFW, will be positively impacted by Trump's return to office. 

But Yost said one area that likely won’t see much traction in North Texas in the years ahead is solar manufacturing.

“It’s going to be slow, especially [in] these next four years,” she said. “Anything [electric vehicle or] solar is going to get pushed.”