Understanding the Impact of American Tariffs on Construction
When we think about tariffs being enacted by one government on another, we often see it as being for the benefit of the nation. And while there may be some benefit or rationale behind tariffs, it appears that in the modern economy, many businesses are hit in a negative way. And that is certainly true when we think about the way that American companies are being hit by the latest tariffs announced by the government.
The purpose of a tariff is to try and bring up the price for imports. And that means when a company is importing a specific material, there is a tax at the end of it. In some cases, these can be helpful, as they will allow domestic industries to develop. But the issue is when you have many sectors that are dependent on getting these materials from other markets and then using them in the country. Those higher prices can end up having a negative impact.
Steel and Aluminum Tariffs
The most recent tariffs that we have seen announced by the United States refer to steel and aluminum. And they are having a negative impact on the construction industry in some states. We have already been hearing about how construction companies in Nevada are being hurt by these tariffs.
Say you are a driveway paving contractor in [city] or a regular construction company. Now you have certain materials that are more expensive to purchase. The result is that you have to put some of that cost onto the consumer. And if you have to raise prices on consumers by thousands of dollars, many will not want your services. And that results in a loss of business. And that is what companies in Nevada are reporting right now.
It is unclear if this will be a trend that continues into the long term. But what we know for sure is that it is happening right now. Companies in Nevada are not happy about these tariffs. And they want the government to know that prices for average home construction projects will go up by a few thousand dollars.
Patience is Needed
It is not all doom and gloom though. Many paving contractors in [city] and construction companies are not panicking. Yes, they are unhappy about the tariffs and they wish a different approach was taken. But they also understand what the government is attempting to do. They are in a position where they are hoping for more favorable trade terms with places such as China and the EU. And they hope those trade terms will help their businesses down the road.
Will It Impact Consumers?
The answer to this question is a little complicated. There may not be an immediate impact. It is not as if every construction company in the country is going to raise their prices within days of the tariffs being enacted. But if they remain in place and there is no better trade deal with various partners, it could be a cause for concern.
Right now, it is a wait and see approach. Yes, the impact could be negative. But it may be better if consumers give the benefit of the doubt to their government as they negotiate trade deals with China, the EU, Mexico, Canada and others.