Tariffs Likely to Hurt Construction Economy, Experts Say
The announced tariffs were more widespread than anticipated.
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Industry experts are bracing for impact after President Donald Trump announced April 2 a 10% tariff on all countries beginning April 5, with roughly 60 countries, among them China and the European Union, subject to higher rates starting April 9.
“[Tariffs] represent multiple threats to construction, which is more dependent than most sectors on imports for which there is no ready domestic replacement,” including items like large diameter specialized steel pipe and certain wastewater treatment equipment,” says Ken Simonson, chief economist at Associated General Contractors of America. “The cost of both imported and domestically sourced materials will rise. Growers, food processors, manufacturers, warehouse and transportation firms and their workers will lose sales and income as U.S trading partners retaliate.”
Ed Sullivan, economist at the Sullivan Report, shared a similar sentiment, stating that he believes the new tariffs make a recession much more likely to occur, and at a more severe rate. “The announcement yesterday was much broader and severe than I anticipated. For construction, the outlook worsens for virtually every sector,” he says. “My knee jerk reaction is that it will result in a steeper increase in inflation, disrupt product sourcing, and weaken the economy even further.”
While it’s possible that a downturn could cause the Federal Reserve to resume lowering interest rates, Sullivan says, “Initially I think [the Fed] will place inflation as its top priority and will be slow to react.”
“Higher construction costs and lower demand will mean fewer projects,” says Simonson. “The best hope is the tariff announcements will lead to concessions and quick reduction or removal of the threatened tariffs.”
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