What will US tariffs do to the UK construction industry? Nigel Headford, Chief Executive, Council for Aluminium in Building reflects.
‘Unprecedented’, ‘the end of globalisation’, ‘an economic nuclear winter’ – the language used to describe the introduction of sweeping tariffs by the Trump administration at the start of this month, are emotive. They aren’t, however, a surprise.
Donald Trump was elected on a mandate to drive economic change. A shake-up of trading agreements, particularly with China and those countries seen to be aligned to or under its economic influence, was always on the cards.
The introduction of ‘reciprocal’ tariffs has nonetheless delivered a shock to the global economy and while the UK has escaped the brunt of Trump’s frustrations, the escalating trade war between the US, China and Europe, will have clear ramifications for the UK construction industry.
Construction thrives on certainty. It is clear, that against the wider economic backdrop, that that is in short supply.
At a headline level in the short-term project costs may increase, where products are being sourced globally. The flip side is that reduced demand in the US, particularly for Chinese products, may lead to an easing of material inflation in the medium term.
The bigger issue is confidence. Against the backdrop of an economic slowdown, investors may delay new projects, putting contractors and their supply chain under pressure.
It is also worth remembering that the latest round of US tariffs follow the 25% tariffs on aluminium imports into the US at the beginning of March.
This has prompted warnings from the Aluminium Federation (ALFED), that while on the one hand tariffs have slowed demand for aluminium into the US in general, they have also increased demand for aluminium scrap, which are exempt.
ALFED has warned that this could lead to a risk of domestic ‘leakage’ of scrap from the UK, something which could threaten the circular economy and the UK’s sustainability objectives.
It makes schemes like the CAB Closed-Loop Recycling Scheme, even more important. It supports industry sustainability by isolating waste streams so that higher value aluminium alloys used in construction are ring-fenced. This also means that manufacturers can command a higher price, from recycling specialists.
Putting concerns about the prospects for the global economy to one side, a glimmer of hope may be that the swirling economic headwinds created by US increase pressure on the Bank of England to lower interest rates. This is something which could deliver a little more energy to a still challenging home improvement market.
It’s also important to remember that the majority of building materials used in UK construction are sourced domestically (75%). Alongside the Government’s target of delivering 1.5million new homes by the end of the parliamentary term, there will be opportunities, as well as challenges.
We’re working with the aluminium building products and construction sectors to support CAB Members through what have been a challenging few months and to take advantage of market growth as it accelerates the second half of this year.
This includes our Technical Conference which will be held at the University of Loughborough on 15th May. It includes technical updates on regulatory change, sustainability and the application of software innovations including the use of virtual reality tools and AI in the built environment.
In the meantime, we’ll continue to do what we do best as an industry. That is to continue to show resilience, continue to innovate and to deliver sustainable building products as partners to the construction industry.
For more information visit www.c-a-b.org.uk. email enquiries@c-a-b.org.uk or call the team on 01453 828851.
