📦 Trade Wars, Inflation Myths & CRE Reality — The Tariff Story Investors Missed 🏗️💡

📉 Tariffs Didn’t Spark Inflation Like Expected — What New Research Means for Investors 🏢📊

January 16, 2026•3 min read

📉 Tariffs Didn’t Spark Inflation Like Expected — What New Research Means for Investors 🏢📊

📦 Trade Wars, Inflation Myths & CRE Reality — The Tariff Story Investors Missed 🏗️💡

Tariffs, Inflation, and the Real Economic Impact Investors Need to Understand

For years, sweeping U.S. tariffs have been widely assumed to trigger sharp inflation spikes. The logic seemed straightforward: tariffs raise import costs, businesses pass those costs on, and prices rise across the economy.

New academic research challenges that assumption.

A recent analysis by Gita Gopinath of Harvard University and Brent Neiman of the University of Chicago finds that U.S. tariffs imposed during 2018–2019 — and again in 2025 — produced far more muted inflationary effects than many economists initially expected.

For commercial real estate investors and business owners, the implications are nuanced — and important.

Why Tariffs Didn’t Deliver the Inflation Shock Many Expected

The researchers found that tariffs do function as taxes on U.S. importers, but their real-world impact depends on several offsetting forces rather than simple price pass-through.

Key findings include:

·Cost absorption vs. pass-through: Many businesses absorbed tariff costs in margins rather than fully passing them to consumers.

·Rapid substitution: Buyers quickly shifted away from tariffed goods to alternative suppliers and products.

·Currency effects: A stronger U.S. dollar offset much of the import-price pressure while dampening export competitiveness.

In practice, inflation outcomes were shaped by behavior, not just policy announcements.

Announced Tariffs vs. Real Tariffs: A Critical Disconnect

One of the study’s most important conclusions is the gap between headline tariff rates and effective tariffs actually paid.

Delays, exemptions, retaliatory measures, renegotiated trade terms, and supply-chain rerouting — including substitutions under the United States–Mexico–Canada Agreement (USMCA) — significantly reduced the realized tariff burden.

Earlier tariffs focused primarily on Chinese imports were narrower and more stable, making them easier to measure. Later tariffs were broader in scope but far more fluid in execution.

For investors, this underscores a recurring theme: policy headlines rarely translate directly into economic outcomes.

Tariffs Are Still Reshaping the Economy — Just Differently

Muted inflation does not mean tariffs are inconsequential.

The research confirms:

·Historically high pass-through to import prices

·A sustained decline in China’s share of U.S. imports

·Rising input costs for domestic manufacturers

These shifts are quietly reshaping supply chains, manufacturing footprints, and regional economic growth — all of which matter deeply for commercial real estate demand.

What This Means for Commercial Real Estate Investors

For CRE investors and business owners, the takeaway is not complacency — it is vigilance.

Tariffs introduce second-order effects that influence:

·Industrial and logistics demand

·Manufacturing site selection

·Construction input costs

·Regional job growth

·Currency-driven capital flows

Markets tied to reshoring, nearshoring, and logistics infrastructure may benefit, while others face margin pressure from higher domestic input costs.

As U.S. trade policy continues to evolve, investors who monitor effective tariffs, supply-chain reconfiguration, and currency trends — not just headlines — will be better positioned to manage risk and identify opportunity.

Bottom Line

Tariffs have not triggered the inflation shock many feared — but they are quietly reshaping trade patterns, production decisions, and regional economies.

For commercial real estate investors, understanding these dynamics is no longer optional. Strategic flexibility, disciplined underwriting, and close attention to second-order impacts will separate winners from those reacting too late.

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Bill Rapp, CRE Broker

I am a Houston commercial broker, with residential experience, as well as a lending background. I have been in the real estate industry for 14 years and counting, and I have worked in many roles within the industry and each has given me a unique perspective of the industry as a whole. My dedication to clients is rooted in this industry knowledge, but also includes my desire to go the extra mile in networking to source off market opportunities for my clients. Me and my team at eXp Commercial have a cutting-edge technology package that gets the widest exposure for each transaction. eXp Commercial offers a nationwide network through which we can deliver the best exposure and professional advice to achieve our clients’ goals while also minimizing their risk. Clients appreciate my methodical method of discovery in our initial consultation. Through which we can get to know each other and their specific’s business’s needs and objectives on a granular level. Our processes help navigate each transaction and its potential pitfalls through to a successful outcome for our clients. It is my stated goal to provide our clients with extensive market analysis and expertise that fosters innovative solutions and rewarding commercial real estate opportunities.

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