Construction costs rising rapidly as
potential tariffs threaten scarcities: AGCA
Florida Construction News staff writer
Construction costs have risen
sharply in the first months of 2018 –
especially March - with increases for
a wide range of building materials,
including many that are subject to
proposed tariffs that could drive
prices still higher and cause scarci-
ties, according to an analysis by the
Associated General Contractors of
America (AGCA) of Labor Depart-
ment data. Association officials
warned that tariffs on some items
might lead to project delays and can-
cellations if supplies become unob-
tainable or too expensive for current
budgets. “Prices increased for many items
in March, even before tariffs an-
nounced for steel, aluminum and
many items imported from China
have taken effect,” said the associa-
tion’s chief economist, Ken Simon-
son. “Steel service centers and other
suppliers are warning there is not
enough capacity at U.S. mills or in
the trucking industry to deliver or-
ders on a timely basis. Thus, contrac-
tors are likely to experience still
higher prices as well as delivery de-
lays in coming months.”
The producer price index for in-
puts to construction industries,
goods—a measure of all materials
used in construction projects includ-
ing items consumed by contractors,
such as diesel fuel—rose 0.8 percent
in March alone and 5.8 percent over
12 months. The year-over-year in-
crease was the steepest since 2011,
the economist noted.

“Many items contributed to the
latest round of increases,” Simonson
observed. “Moreover, today’s report
only reflects prices charged as of
mid-March. Since then, some tariffs
have taken effect, many others have
been proposed, and producers of
steel and concrete have imple-
mented or announced substantial ad-
ditional increases.”
6 – SPRING 2018 — Florida Construction News
From March 2017 to March 2018,
the producer price index jumped by
13.7 percent for lumber and ply-
wood, 11.4 percent for aluminum
mill shapes, and 4.9 percent for steel
mill products. The U.S. has been in a
dispute with Canada over lumber im-
ports, has imposed tariffs on several
types of steel and has announced or
recently imposed additional tariffs—
not reflected in the March price
index—on steel, aluminum and nu-
merous Chinese construction prod-
ucts. Other construction inputs that
rose sharply in price from March
2017 to March 2018 include diesel
fuel, 39.7 percent; copper and brass
mill shapes, 11.2 percent; gypsum
products, 8.4 percent; and plastic
construction products, 5.8 percent.

In addition, concrete and other sup-
pliers announced significant price
hikes that were due to take effect in
April. Construction officials said the tar-
iffs that have been announced have
already triggered a surge of orders
that mills say they cannot fill on a
timely basis, which will create
budget problems, delays and possi-
bly cancellations for infrastructure
and other public projects. They said
adequate funding of infrastructure
would be a better way to foster de-
mand for domestic steel and alu-
minum without harming contractors.

“Tariffs will harm contractors that
are currently working on projects for
which they have not bought materi-
als and will disrupt budgets for fu-
ture construction,” said Stephen E.

Sandherr, the association’s chief ex-
ecutive officer. “The best way to help
the U.S. steel and aluminum sector is
to continue pushing measures, like
regulatory reform and new infrastruc-
ture funding, that will boost demand
for their products as the economy
expands.” View producer price indexes for
construction.