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For general contractors and other construction industry professionals, the cost of doing business could soon rise because of an increasingly hostile trade war between the United States and China.

The Office of the U.S. Trade Representative opted May 10 to increase tariffs on Chinese goods from 10 percent to 25 percent. Those goods include important building materials like alloy and steel. The original 10 percent rate was established in September 2018.

鈥淭his is actually a tax that American consumers pay, ultimately,鈥� said Mike Salsgiver, executive director of Associated General Contractors’ Oregon-Columbia chapter. 鈥淭he sooner you can eliminate tariffs, the better.鈥�

Most people don’t understand that Americans are the victims of tariffs, Salsgiver said. Increases in material prices will just force general contractors to raise prices for their clients, he explained. For this reason, he said, AGC‘s members are generally opposed to any restriction on international free trade.

A study by the Federal Reserve Bank of New York found that the 10 percent duty increase last year brought the typical American household an annual cost of $419. According to the research, the raise in tariffs will bring that cost to $831 this year.

The increase in tariffs to 25 percent was first announced by the Trade Representative in December, with intent that it take effect in March. That announcement had a noticeable impact on the construction industry.

An economic analysis released in April by the National Association of Home Builders found that imports of residential construction materials from China had increased in December by more than 30 percent, just before the Trade Representative’s announcement. In January, those same imports decreased by more than 20 percent, which NAHB attributed to expectations of high tariff rates.

A survey conducted last week by the Monmouth University Polling Institute found that 62 percent of Americans believe consumers will bear most of the damage from Chinese tariffs.

A spokeswoman for Skanska USA, a branch of the world’s fifth-largest construction company, said the firm has not yet made a determination on the potential impact of tariffs, and doesn’t want to speculate without more information.

Ken Simonson, chief economist for the Associated General Contractors of America, likewise said he isn’t sure yet how general contractors will be affected. While he said he does have concerns about the price jump, he added that the magnitude of different goods that make up the industry make it hard to track exactly which impacts will be tangible.

As an example, Simonson said for smaller parts like fasteners, the price difference might be negligible enough that contractors don’t raise costs. Many contractors go through a servicer or distributor, and don’t always pay attention to changes overseas themselves, he added.

Another option, Simonson said, is to make design changes. He pointed to pile drivers, who might switch from steel piles to those made of reinforced concrete. When contractors and engineers come up with alternate solutions, they can avoid passing tariff costs onto consumers.

But alternatives aren’t always available, as trade wars have affected imports even on the same continent. While the Trump administration last month announced that it would lift tariffs on steel and aluminum imported from Mexico and Canada (before imposing a new tariff on Mexican goods to take effect June 10), tariffs are still in effect on Canadian wood. NAHB estimates these restrictions add an average of $9,000 to the price of a new house.

The construction industry is already in a precarious situation, Salsgiver said. While the economy is booming, profit margins have only slightly recovered from where they were during the recession, he said.

Even as the United States and China work toward a solution acceptable to both, it might be too late for American consumers, who could end up stuck with high prices even after the tariffs are reversed.

鈥淎nything that increases costs is going to put downward pressure on what is already a fairly weak recovery,鈥� Salsgiver said. 鈥淚n our experience it’s pretty rare for costs to go the other direction, unless you’re in a recession.鈥�