There have been a lot in the headlines recently regarding tariffs on steel and aluminum imports. The aim of this protectionist trade policy is presumably to boost jobs and the American economy. While the construction industry is notorious for its inability to reach consensus or cooperation on issues, these new policies have been universally panned. Nearly all industry publications including ENR, Architect’s Digest, and National Real Estate Investor, among others have voiced strong opposition to the idea. Industry associations such as AIA, AGC and ABC have also spoken out. The impact on the construction industry will be harmful to jobs, wages and the overall economy. In short, it’s bad for business.

Economic protectionism has a long, checkered history. It swept across Europe in the decades leading up to WWI setting off a European trade war. The Smoot-Hawley Tariff deepened the Great Depression here in the US, as Ben Stein famously reminded us in Ferris Bueller’s Day Off. The Fordney-McCumber Tariff set off a nasty trade war with our allies during the 1920’s which drove a spike in inflation. In each case, the big loser was the consumer. Ultimately protectionist tariffs are little more than a tax, passed down to the consumer.

The renewable energy sector is still reeling from the recent Sunvia case, which was handed down in January of this year. It places tariffs on imported solar panels in an effort to give domestic manufacturers a price advantage.  The net effect is that while it may provide a modest bump in domestic panel manufacturing, it will have a devastating effect on panel installation due to the significant increase in cost. Installation unfortunately, is where the overwhelming majority of high paying jobs are in the sector not panel manufacturing.

These tariffs are a real problem for our industry. These problems aren’t hypothetical. Not only does it put projects at risk because of the sudden spike in commodity pricing, it puts many contractors at risk across thousands of projects where pricing is guaranteed but purchase orders have not yet been locked in. At the same time, the cost of capital and labor continues to climb. We work constantly with our clients to “make the numbers work”. We scour our projects for innovative methods and materials to reduce cost without sacrificing value. Projects across the country will take a collective hit as a result of these new tariffs.

The politics of these policies are difficult. No matter how well intentioned, sometimes policies like these carry unintended consequences. We hope our leaders in Washington will consider the impact on our industry and avoid these self-inflicted problems.

The SCOOP | March 2018 | More from this issue