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With the impending tariffs on foreign steel and aluminum, there has been a flurry of predictions over the impact this will have on the construction industry. Most feel we will see significant increases in steel prices (including reinforcing steel) that will make construction projects more expensive and force some contractors to absorb the added cost on projects underway or that have already been let.

“These new tariffs will cause significant harm to the nation’s construction industry, put tens of thousands of high-paying construction jobs at risk, undermine the President’s proposed infrastructure initiative, and potentially dampen demand for new construction projects for years to come,” wrote Stephen Sandherr, CEO of the Associated General Contractors of America. “That is because the newly-imposed tariffs will lead to increases in what construction firms are forced to pay for the many steel and aluminum products that go into a typical construction project.” He went on to predict the loss of 30,000 construction jobs.

Others foresee price increases on materials and equipment that may negatively affect margins. Terex announced that it will add a steel cost surcharge to its equipment. “We regret that we have been forced to take this action. As a global manufacturer, we value free and fair markets, and see the imposition of these tariffs as a significant source of friction in the global economy,” said John Garrison, President & CEO of Terex Corporation.

The American Road & Transportation Builders Association (ARTBA) expects transportation contractors to raise their bid prices. “Going forward, contractors will account for the possibility of steel price increases or volatility in their bids even if it is not certain these will occur in the market.”

While we do need to protect our essential industries like steel and aluminum from unfair competition and we certainly need to maintain an adequate supply of essential materials for national defense, this action seems reckless and likely to create trade battles with both our adversaries and allies. Domestic steel makers will likely see profits go up, but will that motivate them to build new steel mills or increase production enough to stabilize prices? Probably not.

Higher steel prices could give structural concrete a slight advantage over structural steel but the negative impact on the economy as a whole is likely to offset that. Today we live in a global economy and building barriers won’t change that fact.