The Potential Impact of Tariff’s

The Potential Impact of Tariff’s
Craig Chiarelli   
December 14, 2017

With Canada and Mexico currently exempt from these tariffs, close to 20% of the imported steel will be unaffected, helping to ease concerns for the industry.

How does this affect the bottom line on your construction project?

To show how this steel price increase affects construction in our institutional market, we can use a 100,000sf building that is $500/square foot or $50,000,000 as an example. If we assume a steel structure that is 15 pounds/square foot, the building would have 750 tons of structural steel. Applying a $200/ton premium on this project yields an additional $150,000 or a 0.3% increase to the overall budget.

There are many other trades that have steel and/or aluminum products in your construction projects such as pipe, electrical feeders, metal studs, and other finished metal materials. For this reason, we recommend remaining consistent on unit pricing and carrying an overall “tariff contingency”, what we call a “bidding contingency”, to deal with this temporary market condition. For the steel structure example above, a 1% bidding contingency would be appropriate. For concrete structures, 0.5% can be carried. For renovation projects, we see a negligible impact on the overall construction cost and not recommend carrying a bidding contingency.

As the industry re-structures around the tariff regime, price levels will stabilize to a new normal. These rates will then establish themselves “above the line” in a line item estimate and “bidding contingencies” will be eliminated.   

Craig Chiarelli

Craig Chiarelli
Principal

Craig has been in the industry for over 2 decades. He is a leader by example and loves working with anyone showing passion for their work.

Previous Blogs

The Potential Impact of Tariff’s
The Potential Impact of Tariff's Image
With Canada and Mexico currently exempt from these tariffs, close to 20% of the imported steel will be unaffected, helping to ease concerns for the industry.
Read ⟶

Construction Economists