Trump’s trade war with China, Canada and the European Union could lead to increased construction costs for sports facilities and new building projects. Tim Leiweke, whose Oak View Group is leading a renovation of KeyArena in Seattle, said costs on the project have risen from $600 million to $700 million, partially due to tariffs placed on steel, aluminum and other building materials by the Trump administration. The President is currently in a tit-for-tat trade war with some of the country’s largest trading partners and has even called for an end to the North American Free Trade Agreement.
“We have seen a rapid inflation on those costs,” explained Leiweke on the Bloomberg Business of Sports podcast last week. “Even when you have manufacturers and suppliers that are within the United States, they know they can charge more now because of the tariffs.”
The increase in building supplies costs could be exacerbated by a low unemployment rate and increased deportation of migrant workers from outside of the U.S., shrinking the labor pool and making construction more expensive. Leiweke said his group did not lock down the price of raw materials prior to construction and he is not sure how the tariff issue will play out.
“I don’t know if this is a little negotiation game we’re playing right now on tariffs,” he said, “but for us in the industry where we buy rebar, we buy steel and we buy aluminum and we buy a lot of other goods that are manufactured outside of the United States,” he says, “we have seen a rapid inflation.”
Leiweke is currently redeveloping the KeyArena and has agreed to privately finance the project, which increased by $100 million last month. Besides increased costs for steel and aluminum, the project has seen a price increase as part of an effort to minimize the impact of construction on local residents.
“It costs more to build these things and we’ve seen a pretty rapid cost increase in Seattle,” Leiweke said. “But my guess is that this will calm down and hopefully (Trump) is just negotiating.”