Constructor - May/June 2018 - 19

SIMONSON SAYS

Tariffs Threaten Profits, Projects
BY KEN SIMONSON
CHIEF ECONOMIST, AGC OF AMERICA

he would impose tariffs of 25 percent on
all steel and 10 percent on all aluminum
imported into the United States after March
22, except products from Canada and
Mexico. These tariffs are expected to have
both immediate and long-term negative
consequences for construction contractors.
The immediate impact falls on contractors working on fixed-price projects
for which they had not locked in the
price of steel and aluminum needed for
the projects. Some vendors even raised
prices before the March 23 effective date
or rejected attempts by contractors from
locking in orders before raising prices.
Going forward, contractors are likely
to increase the prices they quote on bids
to cover the actual or expected price
increases for metals and metal products
such as machinery, equipment and vehicles. However, both the amount of the cost
increase and the willingness of owners to
accept higher bids are uncertain.
Steel is ubiquitous in construction,
but the sources for it vary greatly. Certain
types of steel pipe are not even manufactured in the U.S. Producers of some kinds
of steel may have little foreign competition,
while others face competition primarily
from Canadian and Mexican suppliers and
still others from countries that have not
been exempted from the tariffs. Sources
may differ according to the distance to
the nearest port, border or U.S. mill. These
factors make it difficult for contractors to
protect themselves from price spikes when
preparing a bid that includes an item they
may not buy for several months or longer.
As for owners' acceptance, most public
agencies have budgets for construction
that are fixed for a year at a time. If bids
for one project exceed their expectation,
they may defer that project, scale it back,
or put fewer projects out for bid. Private
owners may have more flexibility, but they
@Constr uctor Ma g

©ISTOCK.COM/MYKOLASENYUK

ON MARCH 8, PRESIDENT Trump announced

The U.S. economy has becoming increasingly
dependent on foreign-born workers to fill spots
vacated by the ever-growing number of retiring
baby boomers at a time when the number of new
entrants to the workforce has leveled off.
are also likely to cancel or scale back projects where cost rises to a point that they
will not earn a sufficient return on their
investment. In all cases, the amount of
work will decrease.
The tariffs will raise costs for U.S. manufacturers that use steel or aluminum. In
addition, it is highly likely that U.S. trading
partners will retaliate against the tariffs.
That will harm selected exporters, transportation and logistics businesses and
ports. Employees and shareholders will
also suffer. These categories of owners will
then reduce their demand for construction.
While it is too early to assess the full
effects of the tariffs and potential countermeasures, an analysis posted on March
13 by the consultancy Trade Partnerships
Worldwide estimated that the combination would increase steel and aluminum

industry employment by 26,000 jobs but
cost a net of 495,000 jobs throughout the
rest of the economy, including 66,000 in
construction. In other words, for every steel
or aluminum worker hired, 18 - including
two in construction - would lose their jobs.
AGC has launched a robust grassroots
advocacy campaign targeting both houses
of Congress and the Executive Branch.  AGC
has also joined the National Foreign Trade
Council's Alliance for Competitive Steel and
Aluminum Trade, the primary coalition
working collectively to mitigate the tariffs'
effects on a range of American industries.
As the sole representative of the construction industry participating in this coalition,
we will be collecting and sharing company
specific data and anecdotes to demonstrate
the tariff's impact on construction before
members of Congress.
◆

MA Y / J U N E 2 0 1 8 | www.constructormagazine.com 19


http://www.ISTOCK.COM/MYKOLASENYUK http://www.constructormagazine.com

Table of Contents for the Digital Edition of Constructor - May/June 2018

Editor’s Note
President’s Message
CEO’s Letter
Nailed It! Celebrating a Century’s Worth of Tools & Equipment
Simonson Says
A Super Bowl: First-of-Its-Kind Innovation Leads to Award-Winning Stadium
AGC in Action
Positive Charge: Rosendin Electric Receives Construction Safety Excellence Award
Chapter Connection
Creating a Culture of Coaching: How to Engage, Retain and Grow Better Employees
Member and Chapter News
Construction Corner
Technology Toolbox
Products & Services Marketplace
Index to Advertisers
2018 Equipment Guide
Constructor - May/June 2018 - intro
Constructor - May/June 2018 - cover1
Constructor - May/June 2018 - cover2
Constructor - May/June 2018 - 3
Constructor - May/June 2018 - 4
Constructor - May/June 2018 - 5
Constructor - May/June 2018 - 6
Constructor - May/June 2018 - Editor’s Note
Constructor - May/June 2018 - 8
Constructor - May/June 2018 - President’s Message
Constructor - May/June 2018 - 10
Constructor - May/June 2018 - CEO’s Letter
Constructor - May/June 2018 - Nailed It! Celebrating a Century’s Worth of Tools & Equipment
Constructor - May/June 2018 - 13
Constructor - May/June 2018 - 14
Constructor - May/June 2018 - 15
Constructor - May/June 2018 - 16
Constructor - May/June 2018 - 17
Constructor - May/June 2018 - 18
Constructor - May/June 2018 - Simonson Says
Constructor - May/June 2018 - A Super Bowl: First-of-Its-Kind Innovation Leads to Award-Winning Stadium
Constructor - May/June 2018 - 21
Constructor - May/June 2018 - 22
Constructor - May/June 2018 - 23
Constructor - May/June 2018 - 24
Constructor - May/June 2018 - AGC in Action
Constructor - May/June 2018 - 26
Constructor - May/June 2018 - 27
Constructor - May/June 2018 - Positive Charge: Rosendin Electric Receives Construction Safety Excellence Award
Constructor - May/June 2018 - 29
Constructor - May/June 2018 - 30
Constructor - May/June 2018 - 31
Constructor - May/June 2018 - 32
Constructor - May/June 2018 - 33
Constructor - May/June 2018 - 34
Constructor - May/June 2018 - Chapter Connection
Constructor - May/June 2018 - 36
Constructor - May/June 2018 - Creating a Culture of Coaching: How to Engage, Retain and Grow Better Employees
Constructor - May/June 2018 - 38
Constructor - May/June 2018 - 39
Constructor - May/June 2018 - 40
Constructor - May/June 2018 - Member and Chapter News
Constructor - May/June 2018 - 42
Constructor - May/June 2018 - Construction Corner
Constructor - May/June 2018 - 44
Constructor - May/June 2018 - Technology Toolbox
Constructor - May/June 2018 - Products & Services Marketplace
Constructor - May/June 2018 - 47
Constructor - May/June 2018 - Index to Advertisers
Constructor - May/June 2018 - 2018 Equipment Guide
Constructor - May/June 2018 - 50
Constructor - May/June 2018 - cover3
Constructor - May/June 2018 - cover4
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