Industry figures have voiced deep worries about the decision by Donald Trump to impose a 10 per cent tariff on all UK goods – although one analyst believes the move could benefit UK construction.
The US president outlined his plans on Wednesday (2 April) for a sweeping new set of tariffs on imports – which come into effect on 5 April.
Import taxes on steel will remain at the previously announced 25 per cent, while car imports will be taxed at the same amount.
Construction Equipment Association chief executive Viki Bell said the move was “deeply concerning”, particularly in light of existing pressures on manufacturers.
“With surging operational costs, high energy prices, and ongoing skills shortages already squeezing businesses, these tariffs risk exacerbating an already challenging situation,” she said.
However, Applied Value analyst Stephen Rawlinson told Construction News that the impact of the tariffs was complex and, while no one yet knows, the effect on construction and housebuilding could actually be favourable.
He said the ultimate impact could be deflationary on the UK economy as a whole, as manufacturers of goods try to sell products that they can no longer sell in the US cheaply elsewhere.
This could prompt a drop in interest rates, he said, which housebuilders in particular have been desperate to see.
“Construction and housebuilding is probably the component of the UK which is most biased towards UK construction, the materials we use in houses are substantially UK based,” he said, “although there is a big steel component, and if the government does not act to support the steel industry then we are exposed to international steel prices.
“But again you could say, are they going to get better or worse from a UK perspective? Will the steel that used to go to the States need to find a home here in the UK and potentially at lower prices?”
Balfour Beatty and Keller are the only two listed construction companies that operate in the US, he said, and they could benefit if the move prompts more investment in the US economy.
The 10 per cent general tariff imposed on the UK places the country among a group with the lowest level of tariff set by the Trump administration.
Bell said: “It could undoubtedly have been worse – but, as always, the devil is in the detail.
“In the coming days, we’ll closely examine precisely how these tariffs will impact construction equipment manufacturers and their integrated supply chains.”
She called for the UK Government to set up a taskforce to help the industry navigate the tariffs.
Gareth Stace, director general of trade body UK Steel, said he was “deeply concerned” about the tariffs, which have already come into effect for the steel industry.
He said: “The UK Government must continue its efforts to strike a deal with the US, but we recognise that this requires willingness from both sides. Domestic trade policy on the other hand is entirely within the government’s gift and it can immediately take action to strengthen our trade defences.
“We cannot afford to wait any longer as our exports are being damaged, and our market is being undercut by rising imports. UK Steel has warned that the steel crisis has been deepening for some time and bold, decisive and significant interventions are needed now.”
Construction Products Association economics director Noble Francis said the move would cause uncertainty and pricing volatility for UK construction, which will be factored into prices and lead to inflation.
“It is likely to mean higher uncertainty, volatility in pricing, and a shift, over time, towards different trade routes. Only around 15 per cent of UK construction materials and products are exported, but for those materials and products that are exported to the US, then the tariffs will make a significant difference short-term.”
He said most materials and products in UK construction were produced locally, with the EU making up the majority of imports.
“Outside of the EU, the country from which the UK imports the most construction is China. However, it is far too early to determine the direct impacts of the US tariffs and subsequent changes in global trade routes.
“However, the higher uncertainty levels are likely to mean that if housebuilders and contractors are not sourcing locally made materials and products, then there is likely to be more volatility in prices, which may be an issue for firms on fixed-price contracts signed up to 12-24 months ago when these potential risks wouldn’t have been on most firm’s lists of key risks.”
Builders Merchants Federation chief executive John Newcomb said that Northern Ireland may be hit differently from the rest of the UK.
“Under the Windsor Framework, Northern Ireland has access to both the UK and EU markets. This means that Northern Ireland would be forced to impose any retaliatory tariffs levied by the EU on US imports.
“The impact of the new tariffs will be a major discussion point at the next Construction Leadership Council Building Materials Supply Group on 17 April,” he said.
Prime minister Sir Keir Starmer said this morning (3 April) that there would “clearly” be an economic impact from the move, but that the UK was prepared.
“Nobody wins in a trade war. That is not in our national interest. And we have a fair and balanced trade relationship with the US.
“Negotiations on an economic prosperity deal – one that strengthens our existing trading relationship – they continue, and we will fight for the best deal for Britain,” he said.
Business and trade secretary Jonathan Reynolds announced on Wednesday (2 April) that he was launching an immediate four-week consultation with businesses to discuss the impact on them.
“This is a formal step, necessary for us to keep all options on the table,” he said. “We will seek the views of UK stakeholders over four weeks until 1 May on products that could potentially be included in any UK tariff response. This exercise will also give businesses the chance to have their say, and influence the design of any possible UK response.”
He added that the government was ready to “stand by businesses” through this “anxious” time, and talks with the US were continuing.