Trump's tariff hike: New challenge for Aus construction sector

Daily Telegraph

a day ago

In a decisive move that has sent shockwaves through global markets, President Donald Trump has announced a dramatic increase in tariffs on steel and aluminium imports to the United States, doubling them from 25 per cent to 50 per cent.
This decision, made public during a rally at a Pennsylvania steel plant on Monday, has raised concerns about the potential impact on Australia's housing market, which is already grappling with rising costs.
Australia's direct exposure to these tariffs is expected to be limited, with only a small percentage of its steel and aluminium exports heading to the US.
However, the indirect effects could ripple through the housing market, influencing construction costs and availability of imported materials.
Historically, similar tariff hikes have led to increased prices for US consumers and reduced employment in industries reliant on metal inputs.
The tariffs imposed by George W. Bush in 2002 and Trump's first-term tariffs demonstrated these adverse effects, with US industries taking years to recover.
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For Australians, this means that products imported from the US, such as construction machinery and materials, are likely to become more expensive.
This could exacerbate existing pressures on the housing market, where affordability is already a critical issue.
Moreover, the ripple effects extend beyond Australia's borders.
Countries like Canada and Mexico, which export significant amounts of steel and aluminium to the US, will face increased pressure on their metals industries.
This could lead to reduced demand for Australian exports, both directly and indirectly, as North American consumers tighten their spending.
Additionally, affected metals manufacturers may seek alternative markets, potentially displacing Australian exports to countries like South Korea.
This situation is compounded by the OECD's warnings of excess steel capacity, driven by China's substantial steel subsidies.
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Despite these challenges, there is a potential silver lining for the Australian housing market.
A temporary fall in steel and aluminium prices could offer some relief from the post-pandemic rise in building and infrastructure costs.
This could provide a much-needed respite for developers and home builders, potentially easing some of the financial burdens faced by prospective homeowners.
Indeed, exclusive data by the Housing Industry Association shows the cost of reinforced steel had dropped by 7.2 per cent over the 12 months to March, 2025 but are still up 41.1 per cent when compared to five years ago.
The cost of steel beams and sections have also dropped by 5.6 per cent over the past 12 months.
Managing director of ProWay Paul Gianniotis, who has been building livestock equipment over the past decade, said history showed Trump's tariffs on steel would have limited implications on his business.
'A lot of the steel going into the USA (will be) out of the market, and that's going to have to find a home,' he told the ABC.
'So if you just look at the tariffs alone and what will likely happen, (there is) going to be a glut of steel on the planet and, you know, there should be deals to be had.'
Mr Gianniotis said, earlier this year, buying imported steel was around 10 per cent cheaper than buying from domestic suppliers.
After the US tariffs were announced, that discount doubled to 20 per cent.
'So, it's becoming more attractive to import steel as an option, he told the ABC'
While Trump's tariff hike presents challenges for global trade, the Australian housing market may find some relief in the shifting dynamics.
As the situation unfolds, stakeholders in the housing sector will need to remain vigilant and adaptable to navigate the complexities of international trade and its impact on local markets.