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Analyzing the impact
Joe Natarelli of CBIZ discusses how tariffs challenge the construction industry
The construction industry drives the global economy by supporting infrastructure development, residential and commercial projects, and overall economic growth. The introduction of tariffs on imported materials presents significant challenges for contractors. They essentially act as taxes on imports and stand to drastically alter the cost structure of construction projects by affecting everything from raw materials to finished products. Let’ s take a closer look at the materials most affected by tariffs and the strategies that contractors can employ to mitigate their impact.
Global Trade 101: tariffs and their effects
Governments impose tariffs to protect domestic industries from foreign competition, generate revenue, or respond to trade imbalances. Whatever problem they are a response to, their immediate impact is the same: an increase in the cost of imported goods. Since the construction industry relies heavily on a global supply chain to source materials from around the world, this translates to higher project costs and tighter profit margins.
Materials affected by tariffs
Tariffs on the essential materials that the construction industry relies on will increase costs and cause project delays as contractors scramble to restructure their procurement processes. Among the most impacted materials are:
1. Steel and aluminum Steel and aluminum are to construction what flour and water are to baking: fundamental to a wide range of construction projects. The imposition of tariffs on these metals, which are commonly used for structural frameworks, roofing, and cladding, are now subject to significant price increases, particularly if they are coming from major exporters like China. That raises the overall cost of construction projects of all kinds, including commercial and residential properties and various forms of infrastructure.
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