Trump’s Tariffs Are Increasing Costs of Infrastructure Projects Nationwide

Published on December 5, 2018 by Athena Pallas

President Trump’s metals tariffs are significantly increasing the costs for infrastructure projects across the country, which does not bode well for the big uptick in infrastructure projects Trump would like the country to undertake, an uptick which already carried a formidable price tag before Trump’s self-engendered cost increases. Steel is of course heavily utilized in many infrastructure projects, but the costs for steel have risen sharply directly as a result of the 25% tariffs Trump has put on imported steel. According to The Hill:

Contractors working on infrastructure projects across the country have reportedly had to contend with higher costs as a result of steel tariffs imposed by the Trump administration earlier this year. Bloomberg reported Tuesday on infrastructure projects in Michigan, Virginia and Utah, where construction efforts have already dealt with increased costs associated with the tariffs. For example, the cost of steel for construction on repairs to Detroit’s Lower Rouge River have risen by about $1.3 million, according to Environmental Protection Agency data reported by Bloomberg. A project engineer on a new wastewater treatment facility in Utah told the outlet that costs there shot up by roughly $29 million in part because of higher steel costs.

The American Road & Transportation Builders Association, according to Bloomberg, found that 10% of all the money spent on road and bridge projects is spent on steel, so increases in the cost of that steel have a decided influence on increasing the total cost of such projects.

Trump’s stated reason for these and other tariffs is national security, because that is the only legal basis a president has for imposing tariffs without congressional approval, but Trump has been accused of misusing his power, because his true motives are not national security, at least not in each instance, as it is hard to argue that allies like Canada and the countries of the EU pose a national security threat to the United States. Trump would like Congress to pass an infrastructure package to spend what would likely be hundreds of billions of dollars on infrastructure projects, despite the ballooning deficit and the increase in the costs of such projects that would likely continue to occur so long as Trump’s tariffs are in place. The idea of updating the widely deteriorating infrastructure in the U.S. shows some bipartisan support, but that support is likely to wane as costs increase. According to Bloomberg:

If Congress approves a national public-works program next year that Democratic and Republican leaders are proposing, President Donald Trump’s trade war could inflate the price tag, costing taxpayers and construction companies many millions of dollars…U.S. Department of Labor data show double-digit price increases for steel-mill products and other construction materials in the past year. The price of U.S. hot-rolled coil, the benchmark for American steel, is up 20 percent in 2018, largely because of the tariffs. The U.S. Midwest aluminum premium, a shipping and handling charge, has more than doubled…Besides tariffs, labor shortages, fuel prices, and other factors are also driving up construction costs and creating uncertainty in the bidding process as states and localities aim to build roads, bridges, and other public works that the American Society of Civil Engineers estimates require an additional $2 trillion by 2025.

That figure from the American Society of Civil Engineers, the estimate that an additional $2 trillion will be needed over the next seven years for such projects, is quite daunting. Trump’s plan would call for states to bear a large part of the financial burden for infrastructure projects, rather than the federal government, but many states are not in the financial position to spend so much additional money, and having the federal government foot the bill would potentially cause negative political consequences, since taxpayers would likely not be pleased to shoulder that amount of additional spending, either.

Trump’s metals tariffs have also increased the costs of automobiles and raised manufacturing costs, which has caused some companies, including Harley-Davidson, to decide to move more of their manufacturing outside the U.S. as a matter of financial survival. Trump claimed his economic policies would cause more manufacturing to move back to the U.S., but the opposite appears to be the reality.

Featured image by Gage Skidmore via Wikimedia Commons.