imposed a 25 % tariff on foreign steel and 10 % on aluminum in a move that he characterized then as“ necessary to protect industries ravaged by foreign trade practices,” and is“… an assault on our country ….”
To add perspective on how this affected the construction industry then( and continues to do so), the U. S. Geological Society estimates imports make up nearly one-quarter of U. S. steel consumption and half of total aluminum consumption.
For his part, Biden seems to have kept these same tenets intact and largely preserved Trumps tariffs on steel and aluminum in an effort to maintain a protectionist trade policy, one that could continue to feed inflation prices, according to experts.
Should Trump win, he has vowed to impose a 10 % tariff on all imports and a 60 % tax on Chinese goods.
What does this mean for the construction industry? Simply put, it’ s a matter of supply and demand and trickle-down economics. That is, if materials cost more to import( or there are heavier fines and taxes for using foreign materials), the obvious answer is that those inflated import tariffs will be passed on to consumers, due to rising construction costs and limited profit from development activity until tariffs are lifted.
That said, the U. S. seems unlikely to reverse its stance on free trade, which means that protectionist trade policies will be around for the foreseeable future, regardless of who gets elected, and will directly impact the construction industry.
Russia-Ukraine Conflict
At a time when businesses and industries around the world were still reeling and recovering from COVID-19, Vladimir Putin decided to invade Ukraine in February 2022. With that, came consequences that still exist today, which are disruptions to supply chains around the world and, according to economic analysts at KPMG, continues to have a direct impact on inflation.
Consider this: almost 375,000 businesses worldwide rely on Russian suppliers— 90 % of which are based in the United States. More than 240,000 businesses worldwide rely on Ukrainian suppliers— 93 % of which are based in the United States, according to Dun & Bradstreet. Analysts for the firm say that exposure of this magnitude has and will persist in impacting the construction space in three areas: aluminum, steel and timber.
In addition, the war is still having an effect on crude oil prices because of its importance to manufacturing, transportation and other raw materials. Coupled with the ban on Russian petroleum or the cutoff of Russian supplies, the situation is exacerbated. To lend perspective, on April 12, 2022, crude oil was trading at $ 104 per barrel, up from $ 90 per barrel on February 18, 2002. Today, prices have come down considerably but are still trading at $ 78 per barrel.
Other factors that are influencing construction material prices are, according to Dun & Bradstreet:
• Voluntary / strategic suspension of shipments. More than the price of fuel, the disruption of trade routes related to the conflict have presented its own set of challenges. Cargo ships have been halted or delayed; flights are being cancelled or rerouted, which affects cargo capacity and continues to affect global supply chains, ultimately opening up additional risks surrounding various products.
• Bans affecting the supply chain. Many countries( including the U. S.) have banned Russian flights.
• Closed ports. Shipping ports around the Black Sea have closed, which means cargo vessels are at a standstill. Shipments by air that traditionally pass through Russian airspace, as stated above, have to now divert and take longer( slower and more expensive) flight paths. This could all culminate in delays for industries that depend on air and ocean transport.
Material Costs Are Affecting Housing Affordability
As the cost of lumber,
10 June 28, 2024 www. contractorshotline. com