As we discussed in the first section of this six-part series, a new tariff on steel and aluminum is set to take action within weeks. As we covered in the second and third sections, because of America’s dwindling steel manufacturing industry, this new tariff may revitalize the national steel industry but come with a price. One of those cause and effects is that steel-reliant industries like the construction industry may be economically impacted by this tariff.
As we will discuss in this section, the next section, and the final section, with purchasing prices for steel and aluminum expected to increase, many aspects of the construction industry’s trade practices could be compromised. As the American Institute of Architects stated, “any move that increases building costs will jeopardize domestic design and the construction industry.” As Jacksonville construction attorneys, we want our clients working seamlessly on projects and a new tariff may affect some industry standards for buyers and suppliers.
Purchasing Prices Set to Increase
Although many American steel companies are currently celebrating a potential resurgence of production, any steel-utilizing company will likely face increased prices to purchase these materials. Many of America’s biggest industries rely on steel including aerospace, automobile manufacturers, and the construction industry. The American Iron and Steel Institute states that the construction industry is responsible for over 40 percent of all steel imported into the country.
Affecting Industry Standards
From the framework of skyscrapers to the homes we live in to the heavy machinery utilized to complete these projects, the process of developing infrastructure relies on steel as the backbone of the structural design. With a tariff in place, building materials and construction costs are expected to increase and the construction industry will simply pay more out of pocket to complete projects. However, a tariff doesn’t increase the national wealth or create job growth but redistributes these elements from steel-reliant companies to the steel manufacturers that provide them with these resources.
Developing a New Purchasing Process
Along with significant increases in purchasing prices on materials, tariffs imposed on imported goods means that many large steel-reliant corporations may have to arrange new agreements with their supplier or in some cases find a new supplier altogether. This is undesirable for any contractor or construction company that will have to undergo a new process while also potentially paying significantly more for similar quality materials as they were buying before the tariff. This process will not only be time-consuming, but also presents certain market pricing unpredictability as suppliers will need to gauge the market and determine the right value as well.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.