Relief for construction materials prices as U.S. drops steel and aluminum tariffs on Canada and Mexico
The removal of tariffs is expected to bring welcome but modest relief to construction cost inflation
July 31, 2019
- On May 21, the United States removed tariffs on steel and aluminum imported from Canada and Mexico. The tariffs, 25% on steel and 10% on aluminum, were removed by the Trump administration as part of a larger negotiation between the three countries as they work to finalize and ratify USMCA, also known as the new NAFTA.
- The removal of tariffs is expected to bring welcome but modest relief to construction cost inflation. Canada and Mexico together provide 29.3 percent of the steel and 41 percent of the aluminum imported into the U.S., and Canada alone is the top importer of both commodities. Commodity prices for steel were down -5.5% year-to-date in May, while aluminum prices have been flat over the same period. Although this trade policy change does not guarantee further price declines, it does create downward pressure on prices that have remained elevated since the Trump administration first announced global tariffs in early 2018.
Source: JLL Research, Bureau of Labor Statistics, USTR