AGC: Tariff Increases Threaten to Make Many Projects Unaffordable

By on April 6, 2018

From Building Design+Construction:  Construction costs escalated in February, driven by price increases for a wide range of building materials including steel and aluminum, according to an analysis by the Associated General Contractors of America of Labor Department data released today. Association officials warned that newly imposed tariffs on those metals will create steeper increases that will squeeze budgets for infrastructure, school districts and commercial projects.

“Price increases have accelerated for many construction materials in the last two years, with additional increases already announced, and others on the way as soon as tariffs on steel and aluminum take effect,” said the association’s chief economist, Ken Simonson. “Contractors will be forced to pass these cost increases along in bid prices, but that will mean fewer projects get built. And contractors that are already working on projects for which they have not bought some materials are at risk of absorbing large losses.”

The producer price index for inputs to construction industries—a measure of all goods and services used in construction projects including items consumed by contractors, such as diesel fuel—rose 0.6% in February alone and 4.4% over 12 months. The index increased by 4.2% in 2017 and just 0.9% in 2016, the economist noted.

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