The senior living industry spent the better part of the weekend and Monday bracing for tariffs that, at least for now, seem to be on hold.
But the reaction of senior living operators, developers and industry associations underscore the unclear current outlook for senior living development in 2025, and come at a time when many companies were hoping to kickstart new growth.
On Saturday, U.S. President Donald Trump announced 25% tariffs on goods from Canada and Mexico and 10% tariffs on goods from China. By Monday afternoon, Trump had agreed to pause the tariffs for Mexico and Canada following conversations with Mexican President Claudia Sheinbaum and Canadian Prime Minister Justin Trudeau.
The tariffs also coincided with significant changes made to the U.S. Agency for International Development (USAID). Over the weekend, the Department of Government Efficiency (DOGE) – crafted by the Trump administration and led by billionaire Elon Musk — was given access to the U.S. Department of the Treasury federal payment system.
Critics say the efforts of DOGE could impact Medicaid and veterans’ healthcare. And while senior living operators are still mostly private-pay with business incomes not directly affected by those actions, questions have swirled whether the new unofficial department could effectively take an axe to the public benefits that senior living residents sometimes use to help fund their stays, including social security, Medicare and Medicaid.
As such, senior living operators are preparing for a range of potential impacts, including impact on rising expenses, ever-lengthening development timelines and lack of available materials needed to continue the industry’s already slow development cadence.
“What will the impact be on construction costs, construction timelines, operating costs, and margins?’ Anyone who claims to know definitively right now doesn’t,” The Springs Living CEO Fee Stubblefield told Senior Housing News on Monday. “I think that’s the point: Uncertainty is a compound that doesn’t mix well in the recipe of business.”
Tariffs, other actions could have wide impact
The Trump administration had previously sought to place 25% tariffs on goods from Mexico and Canada and a 10% tariff on goods from China. By Monday afternoon, the administration had already paused its plans to levy new tariffs on Canada and Mexico for 30 days.
But while the issue of tariffs is set aside for now, the episode raised new questions about what lies ahead for a senior living industry that desperately needs to grow now to meet future demand.
Under the originally outlined tariffs, senior living operators could have paid higher prices for budget staples including food, energy and medical supplies, leaders told SHN.
“The impact to senior housing won’t be germane to just our sector, rather senior housing will suffer the general macroeconomic impacts of higher prices for goods and services sourced from Canada,” 12 Oaks Senior Living President Greg Puklicz told SHN on Monday.
Costs under those tariffs could increase for food, energy, prescription drugs and medical supplies coming from Canada. And that is not to mention the U.S. development sector, which would incur higher prices for Canadian lumber, Puklicz noted. Tariffs such as the ones originally planned could increase the per-unit cost of an in-progress community , and lead to a ripple effect that results in higher market rates. That would negatively affect the sector’s prevalent affordability issue in the end, Puklicz said.
“The impact on the supply side of new development, and the impact of affordability, diminishing the demand pool, will narrow the equilibrium gap, however, at a higher market rate,” Puklicz said.
While it’s too soon to determine the impact of any possible tariffs on senior living development, Charter Senior Living CEO Keven Bennema said he worried the cost of goods “essential to the day-to-day operations” could increase, specifically food and medical supplies.
This ultimately “could be disruptive in ensuring efficient operations, construction starts and [result in] delays,” Bennema said.
Controlling expenses has been a critical lever for senior living operators to grow margins within their respective portfolios since rebounding from the Covid-19 pandemic.
Any additional increases in costs could further stress operations within senior living communities and create additional development headwinds, NIC Senior Principal Caroline Clapp told SHN in a statement issued on Jan. 29.
“New development projects are already difficult to underwrite, and increased construction expenses would be an additional obstacle to sector growth,” Clapp wrote to SHN. “Last, one perhaps unintended consequence of new tariffs is that higher prices may prevent inflation from slowing or may even restart its acceleration, impacting the Federal Reserve’s ability to continue cutting the short-term Fed Funds rate.”
Outside of the impacts around tariffs and government funding, the industry could see further negative impacts if contractors operators rely on various functions, from housekeeping to landscaping, lose undocumented workers to deportations, according to Priority Life Care CEO Sevy Petras.
“I think as an industry, we’re going to be more impacted by some of the ancillary labor that we utilize going away,” Petras said. “It could impact our ability to keep up with certain aspects associated with deploying CapEx dollars.”
The current moment is expected to continue to be a “very fluid and dynamic situation,” according to Argentum Director of Government Relations Dan Samson, with LeadingAge Senior Vice President of Policy Linda Couch telling SHN it was “too early to assess the impact” of the levied tariffs.
“Despite a significant amount of confusion right now around the specifics of the new administration’s policies and their impact on our sector, our nonprofit and mission-driven members remain steadfast in their commitment to delivering high-quality care to the older adults and families around the country,” Couch wrote in an email to SHN.
In the end, American Seniors Housing Association (ASHA) CEO David Schless said the organization remains “hopeful” the Trump administration will “appreciate the potential impacts” of tariffs and “consider mitigation steps to address any harmful inflationary impacts.”
“Imposing tariffs on our largest trading partners will likely impact a broad swath of the economy, including senior living. Industry operators will continue to house, feed, and care for residents and serve our employees with the same level of excellence, irrespective of the potential spike in prices that may result from new tariffs,” Schless told SHN via email.
‘Anticipating a slowdown’ in development
Avenue Development Co-Founder Laurie Schultz said tariffs imposed by the Trump administration could impact those building new communities by spurring higher lumber prices for Canadian lumber and increased costs for electrical components made in Mexico. This could lead to extended build times and take longer for the industry to build new communities, Schultz said.
The development timetable for a new build takes almost 2.5 years to complete, up from an average of 16 months to complete in 2015 to an average of 24 months in 2023, according to NIC data.
“If it’s 20 to 24 months for me to build, I am ordering gear right away, and sometimes even before we close on the financing, we will use equity to order what we need,” Schultz said. “Adding tariffs on top of that is going to be a huge issue.”
Beyond extending construction timelines, the impact of any sustained tariffs could push developers active in senior living to “take a pause” due to the growing economic uncertainty, according to The Weitz Company Pre-Construction Director Amy Burk.
This would ultimately make housing less affordable for incoming residents, Burk added.
Wood and gypsum products imported from Mexico and Canada, along with flooring, electrical gear, HVAC equipment, plumbing fixtures and in-home appliances could be impacted, Burk said.
“We’re experiencing delays with projects that were previously put on hold. Many developers had expected more significant cuts to interest rates, but with the current tariffs in place, it’s likely these projects will remain on the shelf for a bit longer,” Burk told SHN via email. “While our overall company revenue will remain strong, driven by growth in Infrastructure and Data Centers, we are anticipating a slowdown in Senior Living development throughout 2025.”
DOGE and broader industry impacts
With uncertainty swirling around the impact of DOGE accessing the federal payment system, broader economic impacts from recent political impacts remain to be felt.
Musk and his team effectively add a new layer of non-elected bureaucracy to spending of appropriated funds to various federally-funded programs. That creates a new source of uncertainty by itself.
“DOGE effectively adds a layer of approval to the payment flow,” Macquarie US Equity Research Senior Healthcare Equity Research Analyst Tao Qui. “I think it could impact all entitlement programs as they are the largest spending category in the federal budget. Providers downstream will likely see disruptions to payments, longer payment cycles, and possibly higher hurdles to get paid.”
It should “not be surprising” that the senior living industry and its interests “have some concerns” regarding any interruptions caused by DOGE activities, Schless said.
“As housing and care providers to our nation’s seniors, it should not be surprising that we have some concerns regarding payment systems that ensure Social Security, Medicare and Medicaid benefits are not placed in jeopardy,” Schless added.
But without detail regarding the intention of changes in oversight or “the totality of programs” at risk of non-payment, ASHA is not yet offering specific recommendations for senior living providers nationwide, Schless noted.
As cost-saving measures are identified by Congress and the Trump administration, Samson said Argentum would continue to advocate that assisted living be considered a “critical part of the solution” to the country’s long-term care challenges.
“It’s essential that policymakers hear this message not only from us, but from senior living advocates across the country,” Samson said.
