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The Effect of Tariffs on Healthcare Construction Part 1

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On September 24, 2018, the Trump administration established a 10 percent tariff on 5,745 items from China worth over $200 billion. Vital construction materials like concrete and lumber were included in this tariff. Although the initial 10 percent tariff has already had a widespread effect on the construction industry, this is only the beginning; in fact, this tariff is proposed to reach 25 percent in 2019.

These tariffs have had an especially noticeable effect on healthcare providers who now must rethink their construction projects in order to offset the consequences of these new tariffs. In this two-part article, the Florida contractor lawyers at Cotney Construction Law will discuss how these new tariffs will affect healthcare construction. As a contractor, it’s imperative that you are ahead of the curve when it comes to the financial ramifications of tariffs so you can maintain profitability on your current and future projects.

The Material Impact of Tariffs

Tariffs are commonly used to leverage a nation’s position against another; however, most tariffs originating in the United States aim to give domestic businesses a leg up over foreign competitors while minimizing the retaliation against them. The Trump administration’s latest tariff, which follows a similar tariff in August that affected over $50 billion in Chinese imports and another that raised a 25 percent tariff on steel and a 10 percent tariff on aluminum imported from an array of countries, is threatening to derail healthcare construction projects nationwide.

Andrew Quirk, senior vice president and national director of the Skanska USA Healthcare Center of Excellence notes that the tariffs will likely have a material impact in 2019. He told Modern Healthcare: “This is going to start weighing on the marketplace soon if it is not resolved shortly,” he said. “Clients understand that this an oncoming wave. It’s starting to get people’s attention.”

Pause, Stop, Delay, or Proceed?

Skanska has been fielding questions from a bevy of healthcare providers who aren’t sure what their next move should be including:

  • Should healthcare providers move to the capital market?
  • Should healthcare providers submit pre-emptive orders to procure building materials  before tariffs increase again in 2019?
  • Should healthcare providers delay projects?
  • Should healthcare providers change their design plans to cut costs?

So far, Skanska believes that their best response to the tariffs will result in the multinational company seeking out alternative sources of building materials to permit current healthcare projects to maintain their planned design and scope.

To learn more about how new tariffs will affect healthcare construction, read part two.

If you would like to speak with a Florida contractor lawyer, 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.