CONSTRUCTION DEFECT JOURNAL

"News and Information for Construction Defect and Claims Professionals"

CONSTRUCTION DEFECT JOURNAL - ISSUE 242749 - THURSDAY, FEBRUARY 6, 2025

The Ghosts of Tariffs Past May Help Us in the Future

Glowing earth surrounded by trade

The industry must now utilize the lessons learned from the rear-view mirror to strategically prepare for what was promised to be a second round of tariffs come January 2025.

January 7, 2025
Kellie Ros - ConsensusDocs

The havoc material tariffs have caused the construction industry is nothing new. President-Elect Donald Trump imposed heavy tariffs on steel and aluminum in his first administration in 2016. While the tariffs themselves were not wholly unexpected, the ripple effect of those tariffs (coupled with the impacts of the COVID-19 pandemic) caused unexpected challenges for the construction industry. Those included allocating the risk of the additional costs caused by tariffs, supply and demand issues, grappling with escalation clauses, and navigating fixed price projects. The industry must now utilize the lessons learned from the rear-view mirror to strategically prepare for what was promised to be a second round of tariffs come January 2025.

Tariffs’ Impacts on Material Prices Everywhere
New or increased tariffs have the potential to raise prices for a wide range of construction inputs. Based on simple supply and demand principles, this includes inputs produced domestically that compete with foreign imports. For example, if a 20% tariff is imposed on Chinese steel, contractors may look to procure Brazil or U.S. steel in an effort to cut their costs. Such a rush to those less-costly alternatives may result in a supply shortage or an increase in prices in the marketplace across the globe. This occurred in 2016 when material prices indirectly related to the inputs on which the tariffs were imposed even increased. Contractors may be well served to get ahead of anticipated price increases and purchase materials now or take other actions in negotiating contracts to protect themselves.

Ms. Ros may be contacted at kros@pecklaw.com


Use the form below to search the CDJ Archives: Search by topic, name, keywords, etc...

CDJ ARCHIVES-NEWS YOU MIGHT HAVE MISSED