Nationally, and in other states,
there is real anxiety about the poten-
tial tariff impacts, even though
Canada and Mexico remain exempt
under the North America Free Trade
Agreement (NAFTA). While Trump
has indicated he isn’t happy with the
agreement, recent negotiations indi-
cate the three countries are moving
towards a settlement.
However, Stephen E. Sandherr,
chief executive officer of the Associ-
ated General Contractors of America
(AGCA), says the tariffs will be harm-
ful. “These new tariffs will cause sig-
nificant harm to the nation’s con-
struction industry, put tens of
thousands of high-paying construc-
tion jobs at risk, undermine the presi-
dent’s proposed infrastructure
initiative and potentially dampen de-
mand for new construction projects
for years to come,” he said in a
statement. “That is because the
newly imposed tariffs will lead to in-
creases in what construction firms
are forced to pay for the many steel
and aluminum products that go into
a typical construction project.”
“Firms that are already engaged in
fixed-price contracts may be forced
to absorb these costs, forcing them
to cut back on new investments in
equipment and personnel. Higher
steel and aluminum prices will make
the kind of infrastructure work Presi-
dent Trump supports more expen-
sive, forcing federal, state and local
officials to cut back on projects they
can fund. And the likely trade war
these new tariffs prompt will dimin-
ish demand for private investment in
infrastructure as well as construction
demand for manufacturing, shipping
and distribution facilities.”
“Considering the damages these
new tariffs will inflict on the con-
struction industry, it is easy to under-
stand why recent, independent
studies estimate that nearly 30,000
construction workers will lose their
jobs because of these new tariffs,”
he said.
These fears are manifesting in
other southern states, especially
North Carolina (where Nucor has its
headquarters). There, Carolinas Associated Gen-
eral Contractors (CAGC) president
Dave Simpson said steel price in-
creases will be costly, as the metal is
used everywhere in construction, in-
cluding concrete (as rebar), bridges,
to make the structure of buildings,
for beams, in staircases, interior
walls and hardware.
Most of North Carolina’s steel
comes neither from the NAFTA coun-
tries or China – the state imports
most of its steel from Brazil, reach-
ing $52 million in 2017.
Nucor, based in Charlotte, re-
cently raised its prices by $45 per
ton. Overall, the message from the
American Institute of Steel Construc-
tion (AISC), representing the steel in-
dustry, is that the tariffs won’t really
cause that much hardship, while
other associations have been speak-
ing loudly to say it will harm the con-
struction industry and stall
development. In a statement, AISC says: “As for
the price impact of a tariff on steel
projects, the answer is that it will de-
pend.” “However, a 25 percent tariff on
imports would not mean a 25 per-
cent increase on the overall cost of a
project. First, the cost of material is
just one of several components in
the cost of a steel structure. And
while percentages vary from project
to project, even if the full impact of a
25 percent tariff on material cost
was passed on to a project, it would
likely impact the cost of the steel
package by five to 10 percent, and
the total project cost by less than
two percent.”
However, AISC acknowledges
there could be other consequences
because steel prices don’t operate in
isolation. The association noted for
example, that in the past four years,
the index cost of ready-mixed con-
crete has increased by 17 percent,
while the indexed cost for steel has
declined. “And to the extent a tariff
applies to rebar imports as well as
structural products, it will also affect
overall costs for concrete. So, on any
individual project, the actual impact
of a tariff will need to be evaluated
against overall market factors just
like any other volatility in material
costs.” Meanwhile, the National Associa-
tion of Home Builders (NAHB) said in
a statement that the steel tariffs will
be costly.
“Given that home builders are al-
ready grappling with 20 percent tar-
iffs on Canadian softwood lumber
and that the price of lumber and
other key building materials are near
record highs, this announcement by
the president could not have come at
a worse time,” said NAHB chairman
Randy Noel.
“Tariffs hurt consumers and harm
housing affordability. We hope the
administration will work quickly to re-
solve these trade disputes regarding
lumber and steel so that businesses
and consumers have access to an
adequate supply at a fair market
price,” Noel said.
Florida Construction News — SPRING 2018 – 11