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The Construction Industry Isn’t an Expendable Trade Casualty

BY JIMMY CHRISTIANSON
VICE PRESIDENT OF GOVERNMENT RELATIONS
AGC OF AMERICA

No one likes cheaters, whether at cards or in global trade. Countries like China that engage in unfair trade practices should be dealt with in a strategic manner, because trade wars have casualties. That is why AGC of America is fighting to prevent its construction contractor members from becoming trade war cannon fodder.

Steel is pervasive in construction. Wire mesh is used in highway concrete, while steel plate and wire for cables go into bridges. Buildings use large amounts of structural steel for piles and beams, rebar for reinforcing concrete and steel studs for interior walls. In fact, the construction industry consumes 43 percent of domestic steel according to the American Iron and Steel Institute. Aluminum is also used in all types of buildings for window frames and curtain walls, siding and other architectural elements.

As such, increases in the price of these metals can negatively impact a construction contractor’s bottom line. On existing contracts, a contractor will have to absorb the price increase, reducing already slim margins. Similarly, as the price of these materials rises, so too do construction project costs for owners — both public and private. Public owners, which generally have fixed budgets, may be forced to reduce the number and/or scope of projects they put out, including schools, highways and bridges. Some private projects will be canceled as construction cost increases make them uneconomic.

That is just part of the reason AGC of America opposes the president’s 25 percent tariff on steel and the 10 percent tariff on aluminum, both imposed on global rivals and allies alike. Another reason: construction employment will bear the brunt of the metals tariffs. While employing different models and arriving at drastically different figures, various economic reports similarly project that the tariffs will greatly and adversely impact construction employment, especially when compared with other industries. For instance, a report by the Coalition for a Prosperous America (CPA) — a protectionist-leaning coalition — estimates that the tariffs could jeopardize 10,635 jobs in the construction sector, while a Trade Partnership Worldwide report prepared for by the free-trade leaning Business Roundtable puts that figure at 63,930 construction jobs.

AGC members from around the country are reporting ever-rising metal prices and mill delays in filling their orders. AGC of America’s Chief Economist Ken Simonson has sifted through the data and confirmed that steel and aluminum costs are on the rise nationally. From June 2017 to June 2018, the producer price index jumped by 20 percent for aluminum mill shapes and 12.3 percent for steel mill products. Meanwhile, the American Metal Market’s pricing assessment for U.S. domestic cut-to-length plate stands at $47 per hundredweight ($940 per ton), up 38.2 percent on the year.

Since the president called for these tariffs on March 1, AGC of America has educated members of Capitol Hill and the administration about the impact of such tariffs on the construction industry and any potential infrastructure package. We support legislative efforts to end these tariffs imposed under the auspices of national security; have joined with business group allies in calling on the president to reconsider them and garnered media attention from major news outlets, like The Wall Street Journal, about their negative impact on the industry. This is how AGC of America is fighting to help ensure that your construction industry does not become a casualty of any ensuing trade war.