What happened
On February 20, 2026, the U.S. Supreme Court struck down a significant portion of the tariffs imposed since President Trump began his second term in January 2025. In Learning Resources v. Trump, the Court ruled that the International Emergency Economic Powers Act (IEEPA) does not authorize the President to impose tariffs, immediately repealing the swath of country-specific duties and surcharges enacted last year. Tariffs implemented via IEEPA accounted for approximately half of the total customs duties in 2025.1 The ruling did not address whether, or how, the U.S. government will refund the duties paid during that period.
The ruling does not affect tariffs imposed to protect national security or to address unfair trading practices, otherwise known as Section 232 and Section 301 tariffs, some of which date back to President Trump’s first term and target specific products. Tariffs ranging from 10 to 50% on imported steel, aluminum, lumber, automobile parts, and some copper products remain in place.2 Additionally, immediately following the ruling, President Trump announced plans to impose a global tariff under section 122 on all imported goods. Such a tariff could remain in effect for up to 150 days before requiring congressional approval for extension, an outcome that remains unlikely.3
Economic Impact
The repeal of IEEPA tariffs is expected to reduce the effective tariff rate on U.S. imports by roughly 7 percentage points, bringing it to an estimated 7 to 9%.4 Although this reduction is a net positive for the economy, an effective tariff rate in this range would still be the highest seen in the post-WWII era. Economic studies suggest that up to 90% of the tariff costs5 since early 2025 have been borne by U.S. companies and consumers, so a lower cost burden will yield relief for businesses and households. Small and mid-sized firms6 have likely incurred sharper price increases than larger corporates.
In terms of macroeconomic impacts, the inflationary pass-through of tariffs to businesses and households may be lessened and GDP growth will be marginally less restricted. Cushman & Wakefield’s baseline economic forecast7 had already assumed a reduction in the effective tariff rate to 10% for the next several years, so this development does not meaningfully change our outlook. However, this could potentially give the Federal Reserve more assurance to reduce interest rates further in the second half of this year as inflation subsides, in line with our baseline assumption.
Financial markets have responded less to the immediate removal of tariffs and more to the increase in policy uncertainty surrounding trade enforcement and fiscal revenues. While the repeal of IEEPA tariffs reduces input costs for businesses, it also removes a meaningful source of Treasury revenue, creating questions around deficit financing and future tariff actions. As a result, near-term market volatility may remain elevated as investors assess the durability of the ruling, the likelihood of replacement tariffs, and the broader implications for inflation and interest rates.
Therefore, for real estate investors, the primary short-term impact is not trade exposure itself but the extent to which policy uncertainty translates into tighter financial conditions, wider risk premiums, or more conservative underwriting assumptions. To date, bond markets have shown some limited (albeit still relatively contained) repricing, suggesting investors view the ruling as a positive, but incomplete, resolution to trade-related risks.
While this result is generally perceived as a medium-term positive for the economy, significant trade uncertainty remains, leaving consequential questions such as:
- Will the U.S. be obligated to refund IEEPA duties to companies and on what timeline? Unclear
- Will bond markets reprice to reflect the removal of tariff revenue collected by U.S. Treasury? As of today, little movement on yields
- Will the administration pursue additional section 232 and 301 tariffs on specific products? Likely, based on prior policy signals
- Will the administration take a more hawkish stance in trade negotiations, such as those with China and Canada/Mexico? Unclear
- Will firms who raised consumer prices in response to tariffs now lower them? Varies at product level, not likely in aggregate
It is too early to answer these questions with certainty, but the impact to the economy and CRE will evolve as answers develop. In other words, the court ruling is a step toward providing somewhat more restrictive guardrails on trade policy shifts but is far from signaling a return to “business as usual.” Tariffs and trade remain a source of uncertainty.
Impact on CRE
The removal of the IEEPA tariffs will modestly benefit CRE through several channels. First, it reduces the cost of doing business for firms who were directly and indirectly exposed. These are primarily retailers, manufacturers, and logistics firms, some of whom have turned to workforce reduction, delayed or cancelled leases, and implemented other cost-reduction measures to offset tariffs. These industries cumulatively shed 256,000 jobs over the last 12 months, so the reduction in cost pressures will be welcome.
In the near term, policy transition may lead some firms (particularly those with long planning horizons) to proceed more deliberately with site selection, long-term leasing, and capital deployment, until greater clarity emerges. That said, underlying market fundamentals have continued to reassert themselves in several property types. From an investor standpoint, this dynamic is better viewed as a timing consideration rather than a reassessment of underlying demand or asset-level fundamentals.
Leasing activity in the industrial8 and retail9 sectors had already begun to improve toward the end of 2025, and the favorable policy shift should support ongoing resilience over the medium-term. That said, downside risks to the outlook bear close watching due to elevated policy uncertainty. Even though country-specific tariffs are off the table, the likelihood of forthcoming product-specific tariffs could leave certain firms and industries more susceptible to rising costs than they are currently.
The removal of IEEPA tariffs are less of a reprieve for construction, where many key building materials remain subject to tariffs still in effect. In 2025, tariffs had a clear impact on certain domestic materials prices such as steel (+17%), aluminum (+28%), and copper (+21%) and overall building materials inflation accelerated by nearly three percentage points. In a recent analysis, Cushman & Wakefield estimated that, all else equal, materials costs for a typical CRE project could rise by 9% due to tariffs that were in place, and this rollback lowers our estimate to the 6 to 8% range. Thus far, contractors have not fully passed through tariff-related cost increases due to front loading of materials imports in 2025 amid a muted construction cycle in core asset classes (data centers being the exception). These cost pressures could be more fully realized by end users in 2026. Additionally, a downshift in immigration could have an outsize impact on construction labor availability in the years ahead and drive project costs upwards. Taken together, this suggests that while the tariff rollback offers some near-term cost relief, CRE construction projects will continue to face elevated cost and timing risks, reinforcing a more selective and cautious development environment.
Conclusion
Trade policy has become clearer with respect to which tariffs can and cannot be legally implemented; however, near-term uncertainty has increased as markets assess potential alternative actions. The Supreme Court ruling closes the door for broad-based tariffs but introduces new questions around future trade enforcement and fiscal implications. While this dynamic is contributing to short-term market volatility, the longer-term outlook for inflation, growth, and leasing activity improves. The good news is that businesses and households have demonstrated resilience through past trade policy shifts, and we expect policy uncertainty to gradually diminish over the course of 2026.
1 Penn Wharton Budget Model, “Supreme Court Tariff Ruling: IEEPA Revenue and Potential Refunds,” February 20, 2026.
2 As with everything related to tariffs, product-specific tariffs are complicated and nuanced. For example, 87% of the value of imports from Canada and Mexico are exempt from tariffs due to USMCA rules of origin clauses, according to a Penn Wharton Budget Model based on U.S. Internation Trade Commission Data.
3 President Trump announced a global tariff of 10% and subsequently threatened raising this to 15%.
4 Yale Budget Lab, Global Trade Monitor, Moody’s Analytics
5 Who Is Paying for the 2025 U.S. Tariffs? - Liberty Street Economics
6 Tracking international payments: How are midsize firms reacting to tariffs?
7 United States Outlook 2026, Cushman & Wakefield
8 U.S. Industrial MarketBeat Report, Cushman & Wakefield
9 U.S. Shopping Center MarketBeat Reports, Cushman & Wakefield