Earlier this week, U.S. president Donald Trump enacted a range of new tariffs that sent the stock marketing tumbling and left senior living operators and industry associations bracing for impact.
With the move, the White House enacted at least a 10% tax on all goods imported to the United States, with countries such as Vietnam, Taiwan, Thailand and China all subject to steeper import taxes of between 24% on the low end and 46% on the high end. Mexico and Canada were exempted from the latest round of tax hikes, but importers of goods from those countries still face tariffs of between 10% and 25% for certain products.
The wide scope of the tariffs likely means higher costs for a range of imported common goods such as clothing, furniture and electronics along with grocery items such as rice, cheese, nuts, beef, fruit, coffee and alcohol.
Greg Puklicz, president of 12 Oaks Senior Living, believes the tariffs could lead to a spike in operating costs for senior living operators in the next one to two months. Not only that, but any price increases will be felt by residents, potentially impacting their willingness to move into senior housing or pay higher rents.
“We’re going to see that spike, and we’re not going to have the ability to increase revenue through renewal increases until anniversary dates, which can lag anywhere from one to 12 months,” Puklicz said.
New tariffs also could send construction prices higher at a time when the senior living industry needs to rapidly grow to meet demand in the not-too-distant future.
The latest tariffs are a kind of deja vu for operators that remember the tariffs on steel and aluminum during the first Trump administration. Those had a “minimal impact” on U.S. consumer prices given their narrower scope, according to Caroline Clapp, senior principal of research and analytics for National Investment Center for Seniors Housing & Care (NIC). But this time around is different, she said.
“The new tariffs are expected to have a greater economic impact on the senior housing sector and other property types,” she told SHN.
The duration of the tariffs and how other countries respond will determine how severely the tariffs impact the senior living industry, according to Paul Williams, vice president of government affairs for Argentum.
“I think it’s going to be pretty far- reaching,” Williams said. “There’s very few sectors that are exempt from these tariffs.”
Higher tariffs, higher expenses
Although President Trump has falsely claimed that tariffs are paid by the countries subject to them, they are in fact a tax paid by companies importing goods into the U.S. As importers incur higher costs, they could pass those costs onto buyers in the form of higher sale prices. That includes both operators of senior living communities and the people who live in them.
If the cost of living for staff substantially increases, senior living operators will likely have to increase wages to stay competitive, Puklicz said. And as he has noted before, operators like 12 Oaks are paying higher prices for food, energy and medical supplies imported from other countries like Canada. Charter Senior Living CEO Keven Bennema also in February said he worried that the cost of goods “essential to the day-to-day operations” could increase, specifically food and medical supplies.
American Seniors Housing Association (ASHA) CEO David Schless previously said in February that “imposing tariffs on our largest trading partners will likely impact a broad swath of the economy, including senior living.”
Senior living operators have in recent years passed on higher costs to residents in the form of higher than usual annual rate increases. So far, residents have been willing to pay higher rates for senior living services. But as Puklicz noted, the industry can’t quickly increase rental costs to make up a shortfall. And more generally, there are questions about how much future residents are willing to pay without necessarily getting more value.
Senior living residents typically pay for senior living by selling their homes. But higher costs for consumers could mean dwindling savings and a potential reluctance among prospective residents to give up their home equity in exchange for living in senior housing.
“We’re seeing home values likely reduced in a continuing deflationary environment,” Puklicz said. “It’s going to erode away at the nest eggs that seniors have that they were planning to use for retirement.”
Investment bank J.P. Morgan now estimates a 60% chance of a global recession by the end of the year.
Williams believes that operators view resident rental hikes as a last resort due to competition with other operators for prospects. Operators will “look for economies where they can” and try to lower operational costs in the meantime, he said.
But after years of becoming more efficient in the face of a years-long hiring shortfall and rising expenses, operators might find there aren’t many more line items to trim without compromising on important growth and evolution targets.
Tariffs come at bad time for senior living development
The senior living industry must develop new communities at a much faster pace in 2025 in order to meet the demand wave ahead. Senior living construction starts have plummeted in recent years, and new tariffs will only complicate the development process.
Developer Avenue Development sees the tariffs leading more to unknowns, according to
Avenue Development Principal and Co-Founder Laurie Schultz believes the tariffs will mean “immediate cost increases across a wide variety of goods.”
But she is also hopeful “the magnitude may not be as steep as people fear for the medium and long term.”
The price of lumber plunged Friday due to concerns about a housing demand slowdown, which could bring some much needed relief for senior living development pro formas if that trend holds.
“I’m optimistic that tariff negotiations continue and lead to a moderation of pricing impacts on operational expenses and construction costs,” Shultz said. “This is a generational defining moment for our industry to continue finding innovative solutions to meet the demographic demands of senior care.”
Argentum and NIC are less optimistic about the new tariffs. Clapp highlighted the difficulty for current projects to underwrite and said that increased construction costs would be an “additional obstacle to sector growth.”
The industry is “already behind the eight ball” on development as it is, according to Williams. He added these tariffs come at a time when new development is already “pretty dire.”
“I think this puts us even a little bit further back,” Williams said. “We’ll have to see the duration [and] intensity of impacts in the coming days. But it’s certainly going to be yet another challenge for our providers.”
