Tariffs implemented over the past year by the Trump Administration are reshaping costs for tribal casino construction and other expenses well before impacts appear on budgets.
A panel discussion at the Indian Gaming Association Conference highlighted the problem and offered insights as to how the current tariffs affect materials, furnishings, and procurement.
Moderated by Jane Lee, managing partner for American Project Management, the panel included Carl Long, president and CEO of PMI Tribal Services; Chris Creasey, vice president of national gaming for Suffolk Construction; and Kristi Jackson, chair of TFA Capital Partners.
In February, the Supreme Court ruled President Donald Trump can’t use the International Emergency Powers Act to impose tariffs and that taxation belongs to Congress. That opened the door to $165 billion in refunds. Following that, Trump announced a 10% global tariff.
“Nobody knows exactly if this tariff situation that’s been temporarily repealed is going to stay repealed,” Jackson said. “Nobody knows if these rebates that have been announced are going to be repaid or how you go about getting them. Uncertainty creates a problem in its own right.”
Long said the projections of costs have varied day to day, with tariffs implemented and amended by the Trump Administration over the last year. Those 10% tariffs on top of others impact steel, wood, stone, carpet, light fixtures, vanities, chairs, and other products.
“Trump’s use of tariffs isn’t going away for the next three years,” Long said. “As we build and renovate casinos and hotels, you have to plan in that concept. You have to bump the contingency. On a go-forward basis, we are in a high-cost environment.”
Jackson said any projects on the fence of making the cut previously are now more difficult to pencil. In a higher-cost environment, there needs to be a significant increase in analysis.
Long said it’s incumbent on the owners and project managers as to where and how they source products to minimize the impact of potential tariffs.
“You can do that if you get out ahead of it early enough.” Long said. “Where you get it made drives the cost. Some of the trade barriers that the government has in place, you can find another place. Consider that as you go to vendors.”
Creasey said it’s important to get contractors and subcontractors on board and pre-pay steel, for example, before the next tariff goes into effect. “The risk is maybe tariffs go down, but if you’re worried about prices going up, you purchase ahead of time.”
Creasey said there’s been a 3% to 4% increase in construction costs year-over-year based on general inflation. They aren’t seeing anything from tariffs affecting the percentages at this time, except for steel.
“The big impact is labor and we’ve had a couple of situations on the material side where we pre-purchased the steel and hired the subcontractor, who decided not to buy it at a time and take a risk that tariffs would go down, then came back with a change order that the price went up. We had a contract in place to pre-purchase that steel and he had a choice to give us the money back or get the steel going.”
Creasey said they had a contractor submit a change order for tariff costs, but the company didn’t have any backup to support it. The company was only expecting tariffs.
“We have yet to have a subcontractor prove out true tariff costs to us on any change order on any of our projects,” Creasey said.
Creasey said one of the issues with tariffs has been that American steel companies have increased their prices to be just under the price to import it. That has raised construction costs.
Jackson said immigration policy under the Trump Administration has reduced the supply of labor and increased costs. Oil prices have spiked with the war with Iran and that won’t help with prices.
“There might be a modest effect on construction prices because of oil prices, but I think the bigger effect is on consumers, particularly with hospitality and gaming,” Jackson said. “It can impact an available budget or wallet for a consumer.”
Long said the goal of tariffs was to have more products made in the U.S., but the problem is the infrastructure to do that doesn’t exist.
“There is a movement out of China. A lot of people don’t want to be there. President Trump, hate him or love him, is the flash point. He’s willing to say we’re going to make a change and we’re in that reshuffle.”
All of that has made trade more difficult. There’s friction on movement of products, Long said.
