Pause on Tariffs Unlikely to Ease Project Worries
While many tariffs have been paused, tariffs on China have been raised to 125%.
Image credit: Getty Images / VladSt
After going into effect for a roughly half a day on April 9, President Donald Trump pulled back most of the new tariffs his administration announced last week, putting them on a 90-day pause. This leaves in place the current 10% tariff rate that went into effect in early April for most countries, while China will be slapped with 125% tariffs, a higher rate than announced last week. It recently reported that imports from the United States would face a tariff of 84%.
Trump’s announcement had a positive impact on the U.S. stock market on April 9 before stocks fell again as trading opened the following day, reflecting continuing uncertainty and doubt in the wake of the administration's policies, according to some analysts. Likewise, Ken Simonson, chief economist at the Associated General Contractors of America, is wary about its effect on the construction industry. “A 90-day pause on tariffs is probably not enough to restore owners' confidence that they can go ahead with projects or help contractors that order materials with a long lead time,” he says. “Further, the constant changes in announced tariff rates adds to uncertainty, which is a negative for investing.”
Sarah Martin, associate director of forecasting at Dodge Construction Network, shared a similar sentiment. “If some of these tariffs remain on pause for ninety days, it could mute or delay some downside impacts but it won't detract from the uncertainty and confusion across the market right now,” says Martin. “If businesses can't plan for where prices are going to be over the next year, or where they'll source those materials from, the risk that construction activity slows in the short term remains.”
Additionally, the high tariff rate on goods from China will pose challenges. “For more generic items, like steel, contractors may be able to shift purchases to other countries or the U.S.,” Simonson says. “But for items that incorporate a lot of parts and/or labor, setting up replacement supply chains will be time-consuming.”
In some cases, that may not even be an available option. “For lithium, solar panels and other materials for which China has developed the most processing capacity, substitution may not be possible,” he adds.
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