Tariffs – Infrastructure Speed Bump?

Some estimates say the tariffs could cost states $9 billion in import taxes this year. Florida, Ohio, Texas, and Utah – which represent nearly 28 percent of the nation’s aluminum and steel imports – will be most impacted.

There have been enough questions about the potential value of President Trump’s infrastructure program. Estimates of its ultimate worth vary widely.

Now, the announced tariffs on imported steel (25%) and aluminum (10%) are expected to negatively impact any infrastructure program.

Affected Products

Stacked PVC and steel pipe ready for shipment

The US Commerce Department reports that the affected steel products fall into one of five categories: (1) carbon and alloy flat products (e.g., sheet, strip, plate); (2) carbon and alloy long products (e.g., bars, rails, rods and beams); (3) carbon and alloy pipe and tube (includes some stainless); (4) carbon and alloy semi-finished products (e.g., slab, ingots, blooms, billets); and (5) stainless products (flat, long, pipe and tube, and semi-finished). 

The affected aluminum products are: (1) unwrought aluminum; (2) aluminum castings and forgings; (3) aluminum plate, sheet, strip, and foil (flat rolled products); (4) aluminum wire; (5) aluminum bars, rods and profiles; and (6) aluminum tubes and pipes; and (7) aluminum tube and pipe fittings.  All of these are used throughout the infrastructure sector whether it be roads, buildings, water distribution, or other structures.


There is little evidence that a rise in the price of imported metals will not lead to a more general increase in the cost of products fabricated from those metals, used in infrastructure projects.


Impact on States

texas high speed rail

Geographically, the impact would be uneven especially in terms of industrial infrastructure.

The Brookings Institute estimates that Illinois, the nation’s second largest importer of steel products, imports 41 percent of its steel from Brazil. Oil and gas drillers and petrochemical producers in Louisiana rely on imported steel and aluminum to support their operations. For the same reasons, Texas is one of the country’s top five steel importers. Proposed pipeline projects for natural gas would also be unfavorably impacted.

Overall, the potential negative economic impact of increased metals prices due to the tariffs resulting in lower government revenues could come at a time when those same governments are being asked to shoulder a bigger share of the infrastructure investment.

Some estimates say that the tariffs could cost states much as $9 billion in import taxes this year. Florida (where the high speed Brightline hopes to extend to Orlando), Ohio, Texas (where proponents hope to execute a high speed Houston to Dallas rail project) and Utah represent nearly 28 percent of the nation’s aluminum and steel imports.

Impact on Infrastructure Projects

solar farm

Evolution in design and materials practices will offset some of the costs especially as primarily steel bridges are replaced by more concrete based designs. This will not altogether avoid the problem as even concrete designs require steel supports and rebar. Items like rail facilities (including rolling stock) and tunnels will still require significant quantities of the metals for either construction equipment or trains and buses.

Many municipalities were already employing buy American requirements so sourcing practices should not be impacted.

It is important to realize that part of the overall problem with steel especially is the lack of domestic manufacturing capacity for certain specialty steels (stainless has many infrastructure applications both structural and functional). Where those materials are necessary for successful execution of projects, infrastructure providers will have no choice but to absorb the increased costs or fail to undertake projects. In cases where the projects are repair or replacement of obsolete projects where timeliness is a factor this will be an issue.

Some sectors will face their own unique potential for delay on the basis of increased costs. An example is large scale solar “farms” where the cost of the aluminum and stainless steel frames on which panels are mounted will make these installations less cost competitive. Wind power would also be impacted through their extensive use of structural steel and aluminum. The increased cost could negatively impact the cost and timing of such projects for utilities (IOU or publicly owned) delaying important efforts to diversify generation and increase resilience.

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