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Tariffs and Construction Part 1

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Typically, contractors are more successful when they don’t have to focus on international trade. You have secure connections to materials suppliers and your cost estimates are regularly produced to your benefit. On most projects, you walk away with a sizable profit and a grin stretched across your face.

And then everything changes.

The headlines are awash with news of tariffs that threaten to increase your material costs by close to 20 percent. Suddenly, your profitability is squandered and your motivation to work is stifled. Tariffs can have major ramifications on the construction industry, and the most recent wave of tariffs are no different. If you are worried about the effect of tariffs on your contracting business, contact a Denver construction lawyer for counsel on what to do next.

You can’t control tariffs, but you can control how your contracting business responds to them. In this two-part series, the Denver construction lawyers at Cotney Construction Law will discuss how tariffs affect the construction industry.

New Tariffs, New Problems

Contractors and developers typically spend time between projects seeking out land to construct new projects and collecting funding to finance commercial and residential buildings. However, mounting conflicts with China and other major materials producers have lead to stringent tariffs that are already having a significant impact on the profitability of construction projects. The United States has issued extreme tariffs against China and Canada, especially related to building materials like steel and lumber.

The Impact of Tariffs

According to the National Association of Home Builders (NAHB), extensive tariffs aimed at Canadian lumber have increased the price of a typical single-family home in the United States by $9,000. With another round of tariffs purportedly pushing for billions of dollars on an array of Chinese imports, the construction industry has reached a critical crossroads that will require contractors to alter their processes to maintain success.

Robert Dietz, chief economist at NAHB noted that this wave of tariffs “make up about a $1 billion tax on housing.” However, if you combine these new tariffs with established trade penalties, the consequence on the United States construction industry could lead to a “$2.5 billion tax increase.” With builders already struggling with elevated housing costs, this influx of tariffs could severely compromise the construction industry’s profitability.

Our Denver construction attorneys will continue to discuss the effect of tariffs on the construction industry in part two.

If you would like to speak with a Denver construction attorney, please contact us today.

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.