Global Economy Briefs

Steel and Aluminum Tariffs Will Hike Costs

February 12, 2025

Steel and Aluminum Tariffs Will Hike Costs…on Buildings, Bridges, and More

The White House announced plans to restore—and elevate—tariffs on steel and aluminum imported into the United States to a flat 25%. It was noted that there will be no exemptions for allies, unlike when similar tariffs were put in place in 2018. The tariffs go into effect on March 12.

The inflationary impact: As a result, The Conference Board expects the price of steel and aluminum to rise, due to domestic reliance on imports. The US imports about a quarter of the steel and half of the aluminum it uses.

Essential materials for buildings and transportation: Steel is critical to the construction industry, as it is used for buildings, bridges and tunnels. It’s also essential to the transportation industry—commonly used for automotive, rail, ship and aerospace production—along with machinery and electrical grid components.

Aluminum is also used commonly as a construction material for window frames and building cladding, as well as in the automotive and consumer packaging industries.

The tariffs could escalate tensions with Canada: The largest exporter of steel and aluminum to the US is Canada (valued at $29.2 billion in 2023). About 40% of imported aluminum and 25% of imported steel comes from Canada. The decision to impose these tariffs on our ally—after the White House deferred initially imposing blanket 25% tariffs earlier this month—will likely escalate trade tensions.

The TCB take: For US businesses the cost of constructing buildings—including manufacturing facilities necessary for reshoring supply chains—will rise if these tariffs take effect. This will add to the already elevated cost of building over the last three years, due to higher interest rates.

Businesses will need to be aware of this as they evaluate the best course for possibly expanding domestic operations. Companies need to have an understanding that their current cost estimates of materials may not play out as planned for a muti-year time-frame for constructing new buildings and infrastructure.

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