Opinion: Are Trump’s tariffs a threat to industry growth?

Opinion: Are Trump’s tariffs a threat to industry growth?

President Trump’s recently announced tariffs on imported steel and aluminum have received a lot of attention as of late, but what does this mean for contractors and recyclers?

July 5, 2018

President Trump’s recently announced tariffs on imported steel and aluminum have received a lot of attention as of late. In particular, stakeholders across the construction and demolition sectors have voiced concern over whether the tariffs designed to stimulate the U.S. manufacturing industries and the economy at large might have the opposite effect for contractors, in essence throwing the emergency brakes on an industry that is presently enjoying near-record growth.

Under the plan, foreign-made steel shipped to the United States will be subject to a 25 percent tax, while imported aluminum will be subject to a 10 percent tax.

Although the Trump administration has stated that the tariffs will help restore manufacturing at home by encouraging U.S. companies to buy from domestic producers, some industry associations have questioned the validity of the plan, noting that the tariffs could lead to elevated material prices and instigate international trade wars.

“The hope is that uncertainty emerging from the policy making environment will quickly abate,” Anirban Basu, Washington-based Associated Builders and Contractors (ABC) chief economist, said in a recent release. “Many agree that there are opportunities for the United States to improve its access to foreign markets, but also that the eruption of full-blown trade wars could bring the current economic expansion to a halt. That would not be good for contractors in terms of demand for their services. It also likely would translate into additional significant increases in overall materials costs as tariffs take hold, which presumably would further dampen profit margin growth.”

Arlington, Virginia-based Associated General Contractors of America CEO Stephen Sandherr echoed a similar sentiment in a recent release, noting, “Tariffs will harm contractors that are currently working on projects for which they have not bought materials and will disrupt budgets for future construction.”

Regarding the implications the tariffs could have on the C&D recycling space, the Milwaukee-based Construction & Demolition Recycling Association (CDRA) told Construction & Demolition Recycling (C&DR) that the association has concerns regarding potential cost advantages that the import taxes could afford foreign manufacturers.

“The CDRA is concerned that possible tariffs on imports of steel could affect its vendor members that manufacture machinery in the U.S. without penalizing foreign machinery manufacturers selling into the U.S., resulting in an unfair cost advantage. But also, the possibility exists to further exacerbate the problems with exports of recyclables to China, as the tariff war could escalate to affect many other parts of the U.S. economy,” CDRA said in a statement.

As with most things related to the global economy, changes in one country’s policy—no matter how well intentioned—can have sweeping ramifications across the globe.

While it might be too early to forecast exactly what the tariffs might mean for the construction, demolition and recycling industries, time will tell whether Trump’s tariffs are the stimulus the U.S. didn’t know it needed or a presidential misstep that hurt the very industries it was meant to protect.