Effective March 23, 2018, a 10 percent tariff was placed on aluminum imports and a 25 percent tariff on steel imports under the guise of strengthening and improving the nation’s metal industries. The real effect of the tariffs is to act as a tax that would raise the price on imported aluminum and steel, negatively affecting those American industries using the imported metals, and positively affecting those producing them. The immediate reaction of American companies producing steel products for the construction industry was to increase prices to consumers to match the new prices of imports that include a tariff. In short, if the American companies were selling the product at a profit before the tariff, they are able to now dramatically increase profits by raising prices without providing any additional value to consumers.
Last year alone, the United States imported more than 6 million metric tons of aluminum and 36 million metric tons of steel for consumption. According to a report released by the Commerce Department in February, the U.S. is the largest importer of steel. The increased cost of these materials will affect the manufacturing of everything from appliances to soda cans. As a result, consumer prices will see a hike before reaching the end consumer.
So, what does this mean for the construction and home improvement industries? The tariffs will translate into higher costs for U.S. businesses, therefore raising the retail cost of imported aluminum and steel across the board for the consumer. If homeowners plan to renovate or improve their home this year, I urge them to consider purchasing these services NOW, as prices will rise once the imported product hits the shelves on the wholesale market. Many manufacturing companies like mine are holding off on price increases as long as we can produce finished products using pre-tariff raw materials. Once the inventory is gone, price increases on replacement materials will filter through the market to consumers.
We encourage Arkansans to act in two ways. First, contact your senators and representative and let them know you are not in favor of corporate subsidies or increased tax burdens. Let your position be heard. Second, we also urge consumers to act now if they are planning a construction project using these materials. Already, Arkansas home improvement companies have seen a 30 percent increase in the cost of raw materials, with warnings of more to come. For homeowners or businesses looking to make improvements, now is the time. Costs will assuredly rise as contractors and builders continue to use what is left of their pre-tariffed steel and aluminum.
If you choose to act now, be sure to hire a reputable company. A contractor who has longevity and experience, someone who is licensed and registered (every state has different rules; check yours on contractors-license.org or ask your local building inspector), someone who has insurance (liability; worker’s comp) and has a solid reputation. Websites like Guildquality.com can assist in this process.
Owner, Royal Home Improvement Specialists