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Association Urges Administration to Abandon Plans to Impose Additional Tariffs, Which are Likely To Drive Up Construction Costs, Disrupt Supply Chains, and Undermine Project Delivery

 

The producer price index for materials and services used in nonresidential construction rose 0.4 percent in May and 2.2 percent from May 2024, the largest 12-month increase since February 2023, according to an analysis by the Associated General Contractors of America of government data released today. Association officials noted that tariffs on steel and aluminum appear to being driving the price increases and warned that additional announced tariff increases would be harmful to needed construction activity.

 

“The acceleration in the year-over-year rate of increase is alarming, given that most of the tariffs announced so far were not in effect when these prices were collected on May 11,” said Ken Simonson, the association’s chief economist. “It is likely that contractors will be hit with substantial additional price increases shortly, unless the tariffs are postponed or rolled back.”

 

Steel was the biggest contributor to both the monthly and year-over-year increases, the economist said. He noted that the producer price index for steel mill products soared 7.1 percent in May and 8.8 percent over 12 months. The price index for aluminum mill products also rose 8.8 percent year-over-year, despite declining 3.6 percent in May, Simonson added.

 

Tariffs on steel and aluminum were hiked to 50 percent on June 4 from the 25 percent rate that took effect on March 12. Domestic steel producers immediately responded to the steel tariff increase by announcing price increases of $60 per ton for rebar and $40 per ton for 20-foot lengths that took effect the next day, Simonson said.

 

Association officials noted a wide range of additional tariffs that were announced earlier have been paused for now but may go into effect as early as July 9. They warned that the recent jump in steel prices shows tariff increases are likely to have a quick and severe impact on the cost of construction projects and may disrupt supply chains for essential materials.

 

“Construction firms are in no position to absorb or push back against tariff-driven cost increases,” said Jeffrey Shoaf, the chief executive officer of the Associated General Contractors of America. “The Trump administration should abandon plans to impose tariffs on materials that will drive up the cost of construction projects.”