President Trump's import tariffs—25 percent for steel and 10 percent for aluminum—are affecting Seattle's current building boom as developers face the resulting cost increases, according to www.constructiondive.com.
Mortenson Construction's second-quarter 2018 Construction Cost Index report for Seattle says owners should expect a 6 percent to 8 percent increase in costs for the rest of 2018. However, costs could increase by only 3 percent to 5 percent if the tariff issues and trade wars are resolved.
Local real estate developer Kevin Daniels says tariffs have driven up steel costs for his projects by 20 percent; Sound Transit has estimated rising prices for steel and other materials will boost the cost for the Federal Way Link Extension light rail project by $460 million; and developers of the Key Arena reconstruction project are expecting a $100 million material cost increase.
However, developer Greg Smith of Urban Visions says the labor shortage—not the tariffs—are driving up costs for his company's projects as large area projects, such as Microsoft's redevelopment project and the Washington State Convention Center, are pulling many workers from Seattle's skilled labor pool.
Mortenson Construction's report shows the cost increases vary depending on location. The company predicts increases of 5 percent to 7 percent in Chicago; 7 percent to 8 percent in Denver; 6 percent to 8 percent in Milwaukee; and 4 percent to 6 percent in Minneapolis. Those percentages could decrease if the tariffs and trade wars are resolved.
The construction segment's self-storage market, which uses a large amount of steel, has been especially affected by the tariffs.
