Tariff Truce Could Save Billions for Construction Industry

White House officials announced Sunday that they reached a trade agreement with China after two days of negotiations in Geneva. The news comes two months after the United States levied a 145% tariff on China in response to retaliatory tariffs imposed by the world’s second-largest economy.

U.S. officials met with Chinese counterparts this past weekend as the White House sought to restore talks and balance trade between the countries. The meetings culminated in a 90-day pause, and officials state that the tariffs would eventually drop by more than 100 percentage points. That leaves U.S. tariffs on Chinese goods at 30% from May to August and Chinese duties on U.S. imports at 10%.

The trade talks are a welcome respite for the construction industry.

According to the U.S. Bureau of Economic Analysis, China is the largest supplier of imported goods in the construction industry, accounting for 19.7% of construction imports. China also accounts for 25% of all U.S. imports of fabricated metal products and 13% of all machinery imports, which would be subject to the additional tariff on Chinese goods. The European Union ships around 17.5% of products used in construction, while Mexico exports 14.3% and Canada sends 11.3%.

These imports help stave off high construction costs by pushing down total input costs for the industry.

An analysis by Chmura, a labor market data and analysis firm, calculated that input costs for goods used in the construction industry have risen by 39% since 2018. Input costs for domestically produced goods have jumped by 42% over the same period, while inputs to the construction industry that are imported have grown by 27%.

Chmura’s research estimates that the imposed tariffs, should continued talks fail, could add $41.7 billion in costs to the construction industry. This could amount to a tariff burden of almost $2,000 per unit for new multifamily housing.

Sarah Martin, Dodge Construction Network’s associate forecasting director, noted in March that the current tariffs, which are more broad-based than in 2018, pose a greater risk to construction projects in the planning stages. This is because they could be further delayed or cancelled, as owners and developers grow concerned over uncertain pricing and potential supply chain disruptions.

Following the “Liberation Day” tariffs that caused global markets to lose trillions of dollars, White House officials have met with trading partners after economists and business leaders warned that aggressive tariffs could trigger a recession. The U.S. recently announced a trade deal with the United Kingdom that would keep the White House’s 10% tariffs on all imports but with fewer restrictions.