The construction industry is worried about President Donald Trump’s announcement for a 25% tariff on steel and a 10% tax on aluminum imported to the United States, according to a report in Commercial Observer.
The policy will increase the construction costs, which in New York City are already at dizzying heights, according to construction experts. Ultimately, the extra costs could make it harder for future projects to get completed.
“Rising construction costs, along with labor costs and bank financing constraints, have been a significant factor in limiting property development over the course of this [economic] expansion,” Sam Chandan, the associate dean at the New York University’s Schack Institute of Real Estate, said in a statement to Commercial Observer. “Policies that add to cost pressures exacerbate drags on new supply.”
While making foreign steel more expensive via taxes could mean companies may further use domestic steel, the U.S. industry will not have the supply to keep up with the demand, said Louis Coletti, the president and CEO of the Building Trades Employers’ Association.
“The U.S. steel manufacturers cannot produce the quantity of steel needed. Steel manufacturers are already telling contractors to expect price increases,” Coletti said. “The lack of steel availability will also cause scheduling delays that will add to additional cost increases. This policy will have a detrimental impact on the economic growth of [New York] and the nation.”
The National Association of Home Builders (NAHB) also issued a statement regarding President Trump’s announcement to impose tariffs on steel and aluminum imports.
“It is unfortunate that President Trump has decided to impose tariffs of 25 percent on steel imports and 10 percent on aluminum imports. These tariffs will translate into higher costs for consumers and U.S. businesses that use these products, including home builders,” NAHB chairman Randy Noel said, adding that “given that home builders are already grappling with 20 percent tariffs on Canadian softwood lumber and that the price of lumber and other key building materials are near record highs, this announcement by the president could not have come at a worse time.”
“Tariffs hurt consumers and harm housing affordability. We hope the administration will work quickly to resolve these trade disputes regarding lumber and steel so that businesses and consumers have access to an adequate supply at a fair market price,” Noel said.