Tariffs Pose Challenge to Construction Firms

Earlier this year, there were New Tariffs Proposed on Steel and Aluminum by President Trump.  The tariffs amount to 25% on steel and 10% on aluminum imports.  While the dust has not yet settled and the long-term effects of the new tariffs across industries remain unknown, they will certainly significantly impact those firms involved in the production of steel and aluminum as well as those that use the materials as core inputs to their business.

Construction firms in particular will be forced to come up with creative solutions to the increased costs associated with these tariffs.  The American Institute of Architects (AIA) noted that these materials are some of the largest material inputs in the construction of large buildings.  Representatives of the AIA stated, “as creative problem solvers, architects rely on a variety of these materials to achieve functional and performance goals for their clients.  Inflating the cost of materials will limit the range of options they can use while adhering to budgetary constraints for a building.”

In an interview, one Iowa contractor noted that its short-term response to the news was to immediately order as much of these materials as it could, in an effort to stockpile core steel and aluminum supplies at current prices before the tariffs take effect.  Long term, the contractor indicated that it will utilize more wood framing where possible in order to reduce steel usage and keep costs low.

Not all contractors will be impacted equally.  Those specializing in projects with high utilization of steel and aluminum will be forced to evaluate their material sourcing practices and determine how to defray these increased costs or pass them on to customers.

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