The current stalemate between the United States and China over a trade deal could cost the construction industry and other sectors of the economy tens of billions of dollars. The next round of U.S. tariffs on $300 billion of Chinese goods hasn’t gone into effect yet, so there may be time to reach an agreement. How devastating would a trade war affect the AEC industry?

Here’s a quick recap of the ongoing U.S. versus China trade war. In March 2018, President Trump imposed global duties on steel and aluminum that he claimed would prevent China from dumping these materials into the U.S. at below-market prices. Then the European Union and several other countries slammed the U.S. with retaliatory tariffs. U.S. steel producers have reported an increase in business.

In July 2018, President Trump imposed additional tariffs on $50 billion of Chinese goods to penalize them for intellectual property theft. The White House expanded the tariffs to now include $250 billion of Chinese goods. Now President Trump is threatening to impose tariffs on everything imported into the U.S. from China.

According to a recent report in MarketWatch, a trade war is the last thing the U.S. housing market needs. It’s estimated that as many as 12.1 million homeowners plan to sell their home within 18 months with many homeowners planning on selling properties quicker than they planned. Many buyers are concerned that the shift away from a seller’s market could force them to make price concessions and lose gains they would otherwise receive due to the fast pace of home price appreciation.

“Consumer confidence appears to be weaker than recognized, particularly with respect to large ticket purchases like housing or remodeling,” said Rob Dietz, chief economist at the National Association of Home Builders. “Clearly, a trade war increases this uncertainty. We estimate that the 25% rate on the existing set of tariffs represent a $2.5 billion annual tax increase for the housing sector in terms of materials used for construction. A trade war will also hurt sectors of the economy, like agriculture, and increase overall consumer wariness.”

Are real numbers or uncertainty driving up the price of construction? The supply chain related to “sticks and bricks” products from China may impact the cost of home remodels and new construction. Suppliers may push back against Chinese exporters if prices rise too steeply and demand lower prices for building products. Designers may opt to not specify any materials made in China to avoid higher costs or other issues. However, that presents other problems since China has incredible capacity and the infrastructure to make so many products.

The ongoing trade war may scare off Chinese investors bankrolling high dollar projects in the U.S. In a recent article in Investor’s Business Daily, it was noted that the ongoing trade war could stifle the U.S. economy and stop the record growth the markets have been experiencing. Builders, design professionals, investors, manufacturers, and other vested parties hope an agreement between the U.S. and China emerges soon. How has the trade war with China affected your business?