If tariffs lead consumers to feel financial stress, the fallout could surpass the benefits of a tight retail property market, according to Naveen Jaggi, president of retail advisory services for the Americas at JLL.
While demand is strong as companies seek new locations at a time of little availability, shifts in U.S. trade policy have created unpredictability that could hurt consumers, Jaggi explained in an interview at the ICSC Las Vegas industry convention this past week.
"All we have to do is keep telling the consumer that there's pain, and eventually they will start acting on it, right?" he said. Moreover, if a significant global event occurs, Jaggi said, he could see consumers pull back on spending in the near future. But if consumers remain calm, the retail market should remain healthy, he said.
In April, Donald Trump imposed a 10% unilateral tariff on goods imported into the United States. However, the tax on Chinese goods coming into the United States now stands at 30% as the administration and China negotiate during a 90-day pause in their trade dispute. On Friday, Trump took to his social media platform to threaten a 50% tariff on goods from the European Union starting June 1 because "our discussions with them are going nowhere!”
Watch the video to hear Jaggi, based in Houston, discuss how retail property rents increase when a new occupier replaces financially struggling chains.