How Trump’s Current Tariffs Are Affecting the Construction Industry

current tariffs

In the past year, the Trump Administration has put tariffs on the construction industry that resulted in 21 percent import duty on Canadian lumber. A year later, steel tariffs slammed Canadian products at 25 percent, and aluminum tariffs at 10 percent. Steel and aluminum imports alone to the United States sent 16.6 billion dollars right into Canadian business. Find out how your business can overcome the impact of current tariffs and get a chunk of that piece of pie that is no longer crossing the border.

Although some American businesses are benefiting, the cost of doing construction business for Americans is now coming in at a hefty price. There are lost jobs, lost profits, and higher costs to taxpayers. That’s never good.

At the same time, businesses in the U.S. construction industry that want to secure government contracts are having a tougher time. That doesn’t have to be you. You can become the other side of the hefty impacts of the current tariff crisis on the industry.

Impact One — Trump’s Current Tariffs Create Uncertain Market

As with any political decision, the reactions from the industry have been mixed. Perhaps the biggest impact of the current tariffs on the construction business has been uncertainty.

Uncertainty is a dangerous place for any industry to be in.

Construction delays cost everyone, from homeowners to CEO’s. When a big question mark is hanging over the heads of business and homeowners, it gets expensive.

The intention of the Trump Administration through these tariffs was to keep jobs in America and to keep money in America. But many construction businesses today find the changes counter-intuitive.

The tariffs have not stopped Canadian businesses from exporting to the United States. With those increased tariffs, someone has to eat the cost. Trumps changes are leading to American jobs, homes, and money swirling the drain, for some businesses.

American businesses are eating the costs, American homeowners are eating the cost. And Trump’s dream of more infrastructure is becoming a delayed steel pipe dream in many ways.

The incredible statistics that illustrate the state of the construction industry today reveal the power of this uncertainty. But these statistics also reveal that construction businesses with a leading competitive edge can turn that uncertainty into dollar signs.

Impact Two – Americans Eat the Cost

Canadians have not stopped doing business with American construction.

When Canadian businesses import lumber and steel to the U.S. construction industry, they pass on their duty costs to the Americans. This has been seen in price increases in all industries.

The lumber industry alone has seen a price increase at 25 percent over one year and a 60 percent increase over two years. The National Association of Homebuilders has experienced great angst over this.  This is resulting in lumber orders through other countries such as Russia in order to avoid delays and higher prices.

At the same time, single-home buildings are still relying heavily on specified lumber from Canada. The Canadian lumber market previously provided 28 percent to homeowners leaving American home builders among the first to express concern about the current tariffs.

New Homeowners Will Be out of Pocket

The National Association of Home Builders estimates that single-family homes are now seeing an increase in costs from $3,000 to $9,000. They believe the United States construction production rates alone can meet American demands.

We know that more homeowners want to buy and build today. The National Association of Home Builders is hoping these tariffs will be reconsidered by the Trump Administration.

This will meet American demands of lower homeowner costs.

It’s not just lumber. Steel and aluminum are estimated to be at approximately a half to one percent of the final cost of a new home. Multi-story buildings will cost more today in the U.S. construction market as a result of these tariffs.

Businesses in the U.S. construction market experience delays and costs, if they do not have access to a method to beat the competition.

At the same time, businesses in the U.S. construction industry face tougher competition when it comes to snagging those coveted government contracts.

There are surprising methods for winning government contracts today despite perceived limitations of current tariffs.

Impact Three — Some Benefits to U.S. Construction Industry

Although many of the changes and increased costs appear counter-productive to making America great again, there is still money staying in America.

Some say this money is even coming in faster.  At the same time, the Trump Administration has removed some regulations and reduced regulatory costs.

Roofing liability insurance, for example, may be lower now for some businesses in the U.S. construction industry, even if the roofing costs themselves are higher. And reduced regulations also reduce costs for the industry.

Although some of those benefits may not be seen right away, it will ease long-term costs. It is estimated that banking may be more resilient with mortgage lending as well. This is good for both American homeowners and businesses.

But even more so, businesses that want to clinch government contracts can expect to see more profits with slashed regulations.

Economic growth from some of Trump’s other mandates will help the construction business long-term. This is especially true for those working on government contracts.

Impact Four — Business Costs Go Up, Profits Suffer

An important impact on the construction industry today as a result of Trump tariffs is that business costs will definitely go up. When that happens, profits suffer, and this is counter-intuitive to Trump’s vision for America.

Contractors in Houston, for example, say that their non-residential contracts have seen the highest spike in construction costs since 2009. At the same time, when construction businesses stay with existing vendors, they will experience cost uncertainty. 

This will undoubtedly be passed on to their own customers to avoid a profit dip.

This will lead to a spike in bid prices on requests for proposals (RFP). It’s tough on an industry that is still just coming out of recovery mode following the Obama Administration’s recession in the building industry.

Big companies are hurting too. Caterpillar, Deer & Co., and J.P. Morgan saw earnings dip up to 9 percent.  Caterpillar alone saw earnings drop 7 percent in the last quarter alone.

Caterpillar saw stocks dropping from $128.71 to $118.95.  This was caused by a spike up to $40 million in steel and aluminum costs in the third quarter.

Caterpillar is expected to increase its costs between 1 and 4 percent come January.  Steel tariffs have led to a 36 percent spike on the cost of their hot rolled steel. This is going to have an impact on profits for its buyers.

Prevent making the most common mistakes in your RFPs and avoid getting swallowed by those price spikes.

Impact Five -Some Companies Win

It’s not all bad news for the U.S. construction industry, and that is the point of Trump’s tariffs. Some companies that are managing their strategies wiser are coming up with the green.

Larger lumber companies, for example, are winning. Weyerhaeuser is a Seattle lumber company that owns over 12 acres of lumber in the United States and 14 million in Canada. They are seeing some significant profits, and these profits will be passed down as reduced costs to their buyers.

The United States Lumber Coalition is also saying that lumber shipments are increasing by over 1 billion board feet in America alone. This is filling the Canadian gap that is the result of the new duties.

American companies are still continuing to invest in American lumber mills. And that is good for everybody.

While some organizations are complaining there’s only room for the big players at the table, the long-term outlook suggests that is just not the case. Smaller companies can quickly learn how to find and secure contracts easily using leading edge software.

One certainty in this uncertainty — some companies will win. You want those wins to be yours.

Impact Six – American Jobs Lost, and Won

Anytime there is an increase in cost to American businesses, there is also going to be a loss of jobs. Businesses in the U.S. construction industry that are able to secure new construction deals with government agencies will be able to offset those job losses with new government contracts.

At the same time, the job loss numbers can’t be ignored, even by those businesses working with government agencies. In some cases, more so.

The Trade Partnership estimates that approximately 30,000 jobs will be lost in the industry in the short-term. But CDP notes that as many as 25,000 jobs will grow in steel and aluminum over the next 3 years.

Some lumber mills now dormant, will reopen and grow. Approximately 313,000 jobs in the steel and aluminum industries could result from higher production needs.

All of this is also expected to lead to more jobs in infrastructure as well.
This is what Trump campaigned on. More jobs, more profits, and more infrastructure.

There are some expected job losses.  But the flip side of the coin shows more profits which means more jobs in America.

Impact Seven – Speaking of Infrastructure

Many in the U.S. construction industry today feel that Trump’s current tariffs on the industry are at odds with his desire to build infrastructure. It is almost as if his one goal cancels out the other according to the American Institute of Architects.

Not only did Trump campaign on more infrastructure, but he also campaigned on strengthening the steel industry. So far, his tariffs are counter-intuitive to both of these initiatives.

That is the short-term perception.

The Long-Term Outlook Is Good

Steel tariffs announced in March 2018 are leading to a rise in costs for all of the materials needed to build bridges and highways. Many of the summer’s construction efforts were locked in delays caused by the tariffs.

That long construction wait on your morning commute could be the result of a steel tariff, particularly if the infrastructure project is extended and extended due to delays. That long morning commute may go into the next season of the year as a result of those tariffs.

A streetcar extension in Kansas City, for example, is experiencing recalculated costs above the already approved $250 million due to the tariffs. This impacts the city, its residents and taxpayers, and the construction business holding this government contract.

Trump’s approval of a $1.5 billion dollar infrastructure plan had barely passed the desks in Congress when the steel and aluminum tariffs were announced. Further, the price of hot-rolled steel which is a bellwether product for the U.S. construction industry is seeing a significant increase as already mentioned.

Expect those morning commutes and construction delays to be a little longer, which impacts both taxpayers and construction businesses alike.

You can avoid seeing that impact on your bottom line when you find out how to secure government contracts for construction of infrastructure.

Uncertainty Will Always Be There

Taxes, tariffs, duties, import fees, and higher costs anywhere are always going to impact an industry. They are always going to create uncertainty in every industry.

No industry is immune. No business is immune. It’s up to the job of the individual business owner or procurement manager in the construction business to find ways to circumvent that uncertainty.

Trump’s current tariffs on the U.S. construction industry are impacting everyone from homeowners to taxpayers to business owners and procurement managers.

But they are also impacting today’s construction businesses.  In many cases, the tariffs are making it more difficult for contractors to secure government contracts.

The Trade Partnership estimates that the current tariffs are going to levy a $37 billion dollar bill on the entire industry in the short term. If the costs of Canadian goods are impacting your business, so too will that billion dollar impact.

The last free trade agreement took over five years to settle.  But that doesn’t mean that the impact of current tariffs needs to impact you today.

How to Get Ahead of the Competition

The uncertainty caused by the current tariffs is there, which can feel dangerous. But in every business deal, there is always someone happier than the other end, and that’s the same case for the recent tariffs.

Get ahead of your competition by staying on top of the industry trends.  Promote your own construction services on a network seen on ABC, NBC, and Fox and become one of the companies seeing 50,000 opportunities a day.

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