Trump Tariffs Bring Angst, Uncertainty to Mechanical Contracting Industry

WASHINGTON, DC — On Wednesday, April 2nd, the Trump Administration announced its latest round of tariffs. Declaring that foreign trade and economic practices have created a national emergency, President Donald Trump used his authority under the International Emergency Economic Powers Act of 1977 (IEEPA) to impose a 10% tariff on all countries, as well as higher, reciprocal tariffs on those countries with which the United States has the largest trade deficits.

Some exceptions were allowed for steel and aluminum used in the domestic automobile industry, with others for pharmaceuticals, copper and lumber.

The White House announcement included a statement saying in part, “President Trump refuses to let the United States be taken advantage of and believes that tariffs are necessary to ensure fair trade, protect American workers, and reduce the trade deficit.”

The new tariffs have roiled trading markets. Approximately $6.6 trillion of shareholder value was lost the following Thursday and Friday—the largest two-day wipeout of value on record, according to Dow Jones data.

Industry Reactions

Tariffs are set to impact the mechanical contracting industry in a number of important ways. Manufacturers of plumbing and heating tools and equipment—including water heaters, heat pumps and tankless devices—will see their raw materials prices rise and will pass those cost increases on to their customers. For the same reason service trucks and vans will become more expensive.

General contractors will also see the price of materials rise which will have a dampening effect on new construction projects, meaning less work for mechanical, electrical and plumbing subcontractors.

Contractors specializing in maintenance and repair may see an increase in business, however, as customers choose to repair aging plumbing and heating equipment rather than pay for more expensive replacements.

Here are some reactions from around the industry.

Associated Builders and Contractors

ABC Vice President of Legislative & Political Affairs, Kristen Swearingen issued a statement saying in part:

“ABC was founded on the principles of fair and open competition and understands President Trump’s long-term goals for tariffs, especially when they are implemented to protect our supply chain and national security. When it comes to international trade, we recognize that some countries don’t play by the rules, and President Trump has been transparent about his intent to use tariffs to level the playing field.

“ABC members rely on US and global supply chains to build everything from power plants and airports to schools, hospitals and roads, and ABC has encouraged them to have strategies in place like locking in prices, adding escalation clauses to contracts and regaining cash ahead of the implementation of tariffs.

“ABC members are experiencing project start delays and receiving materials price increase notifications from suppliers, both due to tariffs. These results follow the simple law of supply and demand: the cost for construction services will rise, which will lead to fewer construction projects. Uncertainty surrounding tariffs and their impact on materials prices has made it difficult for decision-makers to commit to large capital investments. New or increased tariffs can also raise the price of materials produced domestically that compete with imports.

“The industry is already facing consistently high prices on construction inputs and commodities, which have increased 41% since February 2020. We anticipate materials prices are likely to rise in the coming months.”

American Supply Association

ASA Chief Economist Dr. Chris Kuehl, speaking April 4th on his podcast, “Keeping it Real” discussed the latest tariffs.

“All by themselves, tariffs don’t quite accomplish what is being sought. They are only one of several tools that must be implemented all at once.” (Dr. Kuehl included tax policy, investment in research and development and other economic levers.)

“The problem is when you don’t have access to what you’re tariffing. If the US made absolutely everything that is currently under tariff rules, then it would be a no-brainer… but a lot of what we’re tariffing is unique… it’s not something we produce.

“In order for that to change, you need to convince companies in the United States to produce it, and they’re willing, as long as they can count on these restrictions remaining in place—and that’s the rub. Companies have been down this road many, many times. A tariff is imposed, a couple of years go by, and then a new administration or a new deal is put in place and the tariff gets lifted. Now, the company that did all the investing… finds itself in a worse situation than before.  

“So far, all of the new tariffs have been done with a stroke of the presidential pen, which means the next president—or even the current president—can change it…

“About half of the countries in the world are taking a stiff approach and are going to hit the US with tariffs of their own. The other half are being conciliatory, and asking, well, what do you want from us?

“The whole intent is for the US to sell overseas more successfully than it does now… so the conversation becomes, if you lower your tariffs against us, we will lower our tariffs against you…

“It will be quite a while before all this settles down.”

National Association of Home Builders

For years, NAHB has been opposed to tariffs because of their detrimental effect on housing affordability. The tariff exceptions for Canada and Mexico amount to a major win for NAHB, as Canada accounts for roughly 85% of all US softwood lumber imports and accounts for nearly a quarter of the available supply in the US.

In an official statement to the media made April 3rd, NAHB Chairman Buddy Hughes said:

“While the complexity of these reciprocal tariffs makes it hard to estimate the overall impact on housing, they will undoubtedly raise some construction costs. However, NAHB is pleased President Trump recognized the importance of critical construction inputs for housing and chose to continue current exemptions for Canadian and Mexican products, with a specific exemption for lumber from any new tariffs at this time.”

CONTRACTOR will continue to report on this story as it develops.