The swelling hurts

Aug. 2, 2018

Road and bridge industry falls victim to steel tariff

About twice a year my school would have one of those headliner confrontations.

Two kids would be so obsessed with knocking each other into a bloody mess they would hold the event across the street from the school by the baseball fields. I only went to one of these not-so-prized fights as a spectator, and believe it or not three months later there were no signs of any bruising or scrapes on my body.

President Donald Trump slapped the back of the head of China when he imposed tariffs in March, and a few months later the road and bridge industry has gotten a little weak in the knees. The Asian bully has responded by firmly inserting its mouthpiece and pounding together its fists, deploying a set of tariffs that include a tax on steel. This could go the distance, and the road and bridge industry is a bystander taking the hits.

The American Institute for International Steel has noted that U.S. steel-using manufacturers are encountering product price increases of 50% or more and are experiencing difficulty in obtaining the steel they need, regardless of whether they buy domestically sourced or imported steel. Not only is China’s version of the product coming over more expensive, but the tariffs also allow U.S. steel producers to raise prices without being undercut by international competitors. Brian Deery of the Associated General Contractors of America said some of his members have not been given firm quotes on steel products, and the cost is not known until delivery, making the bidding process more of a guessing game, which is not something a builder should roll the dice on. All this comes during the busiest time of year for road and bridge construction, when steel beams are swinging in the sky and rebar is being locked down below. Costs are being raised and some projects in the planning stages are suffering delays.

Officials in Kansas City are being forced to recalculate the price of a streetcar extension project. Funding was supposed to come from a raise in sales and property taxes approved by voters, but the increase in steel prices has ripped up the original $250 million tag on the project. A 127-year-old railroad bridge over the Mississippi River in St. Louis is in danger of being shut down if it is not replaced soon, and this tariff villain has only tightened the knots of a project now tied up in uncertainty. The state of California is keeping an eye on the situation to see if it might have to raise the prices of future contracts, and Pennsylvania, in the midst of an impressive four-year transportation construction plan, also is holding its breath.

Before I learned steel mills here in the U.S. were jacking up prices domestically I thought there was an impactful solution. I mean, as soon as more mills open up and respond to the demand the less dependence we would have on China. Additional mills in operation also mean more jobs to fill. It would have produced the perfect scenario, one worthy of Trump raising two arms in the air in triumph. The more I follow the steel tariff issue, the bleaker it becomes for the road and bridge industry. A lot of projects have a Buy America requirement. In terms of handing more workers a paycheck, the policy is very enriching, but with the price of steel seeing apprently no limit, fewer projects will be let, meaning fewer workers in the road and bridge industry will be getting paid. At press time, over 57% of respondents to a Roads & Bridges survey believe it will take more than a year to see a relief in steel prices. The fighting days need to be over, quickly.

About The Author: Wilson is editorial director of Roads & Bridges.

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