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Contractors in certain niches can expect significant reductions in material prices after the Supreme Court struck down most of President Donald Trump’s tariffs on Friday.
The the court rejected Trump’s claim to the authority to impose reciprocal tariffs against the rest of the world in a 6-3 decision. That would drive “a modest but significant reduction in material price escalation” for specialty equipment, HVAC and electrical systems and accessories, said Anirban Basu, chief economist at Associated Builders and Contractors.
In the short term, contractors should expect to see some relief in material costs, according to the Associated General Contractors of America.
But the administration was quick to point out its plans alternative fee methods shortly after the verdict, reports the Los Angeles Times. AGC also noted others Material-specific tariffs on wood, steel, aluminum and copper products remain in place and are unaffected by Friday’s decision.
Taken together, this means the Supreme Court’s decision “could be short-lived and completely counterbalanced by increased uncertainty during the transition from one tariff mechanism to another,” Basu said.
This back and forth tends to stall construction activity as owners and contractors weigh whether the decision will stand.
“If they’re repealed, and then say three weeks from now, they’re reimposed, that would cause more uncertainty in the market,” said Ken Roberts, a partner at Venable, a Washington, D.C.-based law firm and chairman of the firm’s construction group. “I think the market will take a wait-and-see approach.”
Companies can adapt to rates if they understand the “playing field,” said Brian Kassalen, principal and construction industry leader at Baker Tilly, a Chicago-based construction consulting firm. Without understanding a framework, however, long-term planning is difficult.
“This yo-yo effect of the tariffs created a lot of chaos,” Kassalen said. “If the Trump administration goes back and looks for other means to try to reimpose these tariffs … that creates uncertainty, which both contractors and project owners don’t like.”
For projects where tariff-related increases are already happening, it depends on whether the money comes back how the contract was draftedRoberts said.
But don’t count on it. AGC has told builders not to hold their breath waiting for refund cheques.
“We have long warned our members that it is unlikely they will see any refunds for materials purchased over the past year,” Brian Turmail, AGC’s vice president of public affairs and labor, said in an email to Construction Dive.
