Tariffs are enforced to raise the price of foreign exports so that domestic businesses can compete. Unfortunately, tariffs don’t require domestic producers to lower their prices if tariffs are severe enough. Although this can stimulate producers, the people responsible for utilizing their products are often subjected to decreased profits. Since tariffs are commonly issued against building materials like steel and lumber, the construction industry is almost always a victim of tariffs.
In part one of this two-part series, our Denver contractor lawyers discussed some of the effects of tariffs on construction. Now, we will continue to explore this topic to foster a better understanding of how tariffs can affect you as a contractor. Remember, tariffs will affect your business, so consult a Denver contractor lawyer to help weigh your options moving forward.
Tariffs and Residential Construction
Tariffs can affect a wide breadth of materials which means your projects will likely see cost inflation across the board. Everything from stone countertops and vinyl floors to ceramic tiles and asphalt shingles can see significant cost increases as a result of tariffs. In addition, the cost of all types of appliances (e.g., refrigerators, ovens, dishwashers, washers, dryers, etc.), lighting fixtures, sinks, bathtubs, and toilets will likely see a noticeable uptick in cost. When you consider the fact that the residential construction industry alone purchased more than $21 billion in products from China and $45 billion from other countries last year, it quickly becomes apparent that the construction industry is headed toward choppy, treacherous waters.
Tariffs and Commercial Construction
Trade wars will have a significant impact on homebuilders, but commercial construction companies are anxious about the future, too. Imported steel has been a divisive topic over the last couple of years. Domestic builders want to purchase imported steel because it is significantly cheaper than domestic steel, but new tariffs are making it impossible to purchase affordable steel domestically or internationally. Although this increase won’t be the end of the commercial construction industry as we know it, it will lead to price increases. In the middle of a labor shortage, rising prices for building materials create another problem that contractors must be cognizant of.
The Federal Reserve has increased interest rates three times in 2018, which takes more money out of contractors’ pockets. Prices are trending high right now, and everything from the cost of labor to the cost of land will increase in the next couple of years. Contractors face an uncertain future as our trade wars continue to flourish. Fortunately, a Denver contractor attorney is on your side to help counsel you through this challenging time.
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.