NYC construction likely to avoid worst effects of steel tariff
The New York City construction industry would likely escape the worst effects of a tariff on foreign steel that was proposed by President Donald Trump last week, according to experts interviewed by Crain’s.
Trump floated the idea of slapping a 25% tax on steel and 10% on aluminum produced abroad during a meeting with industry executives. The move, if it is actually put in practice, would shield domestic producers against competition from abroad but also raise prices for other sectors of the U.S. economy that rely on the metals.
In the five boroughs, however, commercial office developers using structural steel for the skeletons of their towers would likely not see a significant change.
“In the New York market, almost all steel comes from the U.S.,” said Brian Raff, director of government relations for the American Institute of Steel Construction, a structural steel trade group that has said Trump’s proposed tariff does not go far enough in curbing imports.
General contractors and developers could still feel some effects, however, because sapping foreign competition would give domestic producers more leeway to set prices.
“Will this allow domestic steel mills to raise prices a little bit? Probably,” said Paul Brancato, general manager of Ideal Steel in the Bronx. “But I don’t think this is going to be a great boon to the industry where we’ll see steel mill after steel mill opening.”
Any changes to the supply chain worry general contractors, especially for projects in motion or those ordering large or unusual pieces that often come from abroad.
“It will drive up the costs of steel on projects that already have agreed-upon budgets,” said Lou Coletti, head of the Building Trades Employers’ Association. “And it will cause scheduling delays in deliveries and drive up construction costs.”
The city is already home to the priciest construction in the world, and the cost of steel alone rose about 5% between 2015 and 2017, according to a report from Turner & Townsend.
As for the proposed 10% tariff on aluminum imports, the Beer Institute said the move would cost the industry about $340 million a year, or roughly 1 cent for every can sold.
A version of this article appears in the March 5, 2018, print issue of Crain’s New York Business.