According to Construction Dive, the White House has threatened to impose an additional $200 billion of tariffs on China imported goods and the Association of Equipment Manufacturers has spoken out against these threats.
"These new tariffs will greatly hurt construction manufacturers and more than one million jobs will be affected."
Association of Equipment Manufacturers President, Dennis Slater
A week ago, President Trump wanted to add $50 billion in additional tariffs on construction equipment from China and this prompted China to issue $50 billion of their own tariffs on U.S. goods. According to the New York Times, the additional tariffs placed on China is in retaliation for countermeasures China has enforced and will take against the U.S. for their actions in imposing previous tariffs back in March.
Per Construction Dive, earlier this year the U.S. had imposed a 25% steel tariff and a 10% aluminum tariff. The U.S. has implicated China for dumping a glut of material into the U.S. market at cut-rate prices and making it extremely difficult for suppliers to compete. Besides the Manufacturers Association, the Associated General Contractors of America has also warned that these tariffs would be very detrimental to business and that already high material prices would go even higher. In the past year, pre-tariff prices for aluminum mill shapes have risen more than 17% and steel mill products prices rose more than 10%. Furthermore, steel mills who are already backed up with orders beyond their handling in a normal time frame, will see delays and budget overruns.
The U.S. is also coping with the consequences of its decision to eliminate steel and aluminum tariff exemptions for Canada, Mexico and the European Union which is scheduled to begin on June 1st. In retaliation, Canada has proposed to impose similar tariffs on U.S. steel, aluminum and other products. Mexico and the European Union has also made the same proposal.
"This is not only harmful, but inherently unfair to the hardworking men and women of our industry. The American equipment manufacturing worker, the American farmer and the U.S. economy all lose as a result of the administration's reckless and never-ending tariffs.
Our industry supports 1.3 million jobs and contributes roughly $159 billion a year to the U.S. economy but much of that could go away if this tit-for-tat trade dispute continues. We again call on the Trump administration to de-escalate this unnecessary and costly trade war."
Association of Equipment Manufacturers President, Dennis Slater
The AEM is the North American based international trade group which represents off-road equipment manufacturers and suppliers, with more than 1,000 companies and more than 200 product lines in the agriculture and construction industry worldwide.
As per The Guardian, the results of the multi-front trade dispute are already being felt. U.S. lumber prices are up 32%. And this is only since a 21% tariff was placed on Canadian lumber imports. The National Association of Home Builders estimates that 9,400 construction jobs will be lost and the cost of an average single family house will increase by $9,000 due to these tariffs. Any product that uses aluminum or steel has already felt the repercussions. Whirlpool, in its first quarter earnings call, has said these tariffs would cost them an extra $50 million. Campbell Soup stock has dropped 14% since these tariffs have gone into effect.
According to Curbed, the American Institute of Architects also opposes these tariffs, saying that "any move that increases building costs will jeopardize domestic design and the construction industry, which is responsible for billions in U.S. Gross Domestic Product, economic growth and job creation." The impact of these tariffs will also effect larger buildings more than single family homes since a single family home uses more wood than metal. The larger buildings such as multi-story, multi-family construction and commercial building construction require a high percentage of steel. Even those that are primarily concrete will still require steel supports and rebar, including aluminum window cladding. This will greatly impact infrastructure projects. These tariffs will make it extremely difficult to pass an effective infrastructure bill because of the price increases and uncertainty it will cause.
Neel Khosa, Vice President of AMSYSCO, an Illinois based company that manufactures steel post tensioning wire for parking garages and high rises, has stated that the tariff will have a negative impact on the entire construction industry by creating price uncertainty and volatility. He said, I think it's going to be a big positive for those who make steel and aluminum in the United States though. So several thousand people in those industries will benefit while several million people will have their wealth re-allocated to those people." Khosa also said, "The steel tariffs will shoot Trump's infrastructure plan in the foot, to some degree."
Per the Business Insider, tariffs drive up the cost of goods entering the United States and force businesses to pay more for imported goods or buy more expensive domestically produced goods. This creates increasing costs for businesses that use those goods as parts for their final product. Unfortunately, these businesses will either have to absorb these new costs or pass down price increases to consumers. Consumers are then likely to pay more for goods that are affected by these tariffs and buy less as a result, which ends up slowing the growth of the U.S. economy.
