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Ewweb 4822 Link Construction Gettyimages 838476004 1024
Ewweb 4822 Link Construction Gettyimages 838476004 1024
Ewweb 4822 Link Construction Gettyimages 838476004 1024
Ewweb 4822 Link Construction Gettyimages 838476004 1024

AGC Warns of Cost Increases and Project Delays Due to Tariffs

June 13, 2018
Association officials said that the construction industry will bear a heavy share of the tariffs' costs.

The Associated General Contractors (AGC) sounded an alarm on acceleration of construction costs. Based on its appraisal of May data, AGC said in a release that it sees “steep increases for a wide range of building and road materials, including many that are subject to tariffs that could drive prices still higher.”

Association officials said that the construction industry will bear a heavy share of the tariffs' costs.

"Prices jumped at double-digit annual rates for metals, lumber and plywood, and diesel fuel, while ready-mixed concrete, asphalt paving and roofing materials also had unusually large increases," said the association's chief economist, Ken Simonson. "The cost of all goods used in construction rose 8.8 percent from May 2017 to May 2018, the steepest annual increase in nearly seven years."

From May 2017 to May 2018, the producer price index jumped by 17.3% for aluminum mill shapes, 13.9% for lumber and plywood, 13.8% for copper and brass mill shapes and 10.5% for steel mill products.

The U.S. imposed steel and aluminum tariffs on imports from Canada, Mexico and the European Union on May 31. The impact from these tariffs is not reflected yet in the most recent data, AGC pointed out.

"These increases far outstripped the 4.2% rise in the price index for new construction, implying that contractors are facing a severe squeeze on costs for both ongoing and new projects," Simonson added. "Moreover, tariffs imposed on steel and aluminum since this data was collected in mid-May are likely to drive contractors' costs still higher."

Even before they have taken effect, construction officials said the tariffs have triggered a surge of orders that mills say exceeds their current capacity, a situation that threatens to produce construction delays, budget problems and possibly cancellations for future construction projects.