Tariffs, Schmariffs - The Certainty Problem
Hotel developers and owners can manage tariffs. What's difficult to manage is uncertainty
I made a TikTok over the summer, and I think, all things considered, it’s aged pretty well - in it, I said: “tariffs, schmariffs. Love them or hate them, the real issue isn’t the tariff itself - it’s the uncertainty.”
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Running any business, let alone one with a global footprint, is extremely challenging. Add in tariff announcements and shifting “effective dates”... and suddenly the real challenge isn’t what the tariff is, but rather not knowing what it will be and when it will be implemented.
And before anyone explodes on me (like they did in the TikTok comments), let me be clear: I know how much these costs and uncertainties hurt. They are painful for entrepreneurs. My intention isn’t to minimize the effects of tariffs - they are serious. What I’m pointing to is that the uncertainty itself is often the heaviest weight. The uncertainty is the biggest fear for all of us. At this point, I could quote FDR, but I think you know where I’m going with this.
Here’s what that means on the ground:
Hotel Developers and owners cannot plan capital allocations if they don’t know whether a 25%, 50%, or 100% tariff is forthcoming.
Hotels already carry a higher risk in the real estate spectrum - needing ~20% returns to pencil. With high interest rates, labor shortages, and tariff uncertainty? That financially engineered math doesn’t math so easily, and proformas face a ton of headwinds.
Specifiers, Suppliers, and purchasers are in limbo. Will it stack with existing country-wide duties? Do “on-water” shipments get exemptions? Will it only hit residential projects, not commercial projects? Nobody knows.
As my customs attorney put it:
“We don’t have more info than the tweets. We don’t know how they’ll be implemented, whether they stack, what items are impacted, or if there are exemptions. As soon as there’s a formal announcement, we’ll know more.”
That’s the frustrating part. It’s not an if problem. It’s a question of when and how much.
And it ties back to something I’ve written here before: there’s a wave of hotel renovations coming. We all feel it - they are sorely needed. But will the wave break in Q1 or Q4 or even further out? Which owners will have the capital to move first? Just like tariffs, the need is certain - the timing isn’t.
So my commitment is simple: I’ll use this space to cut through the noise where I can. Not to predict outcomes - nobody can - but to offer one more point of clarity in the thousand points of light everyone’s trying to navigate.
Because once certainty arrives - whether it’s tariffs or PIPs or interest rates, or lions, tigers, or bears - then we can plan. Until then?
As Gold Five keeps repeating to his team on the final run, “Stay on Target”.
As Jack White sings - “Steady as She Goes”.
More updates to follow.