New US tariffs on imports from various countries could have consequences for Australian construction.
Australia does not impose tariffs on US goods. Because of the preferential tariff arrangement under the current Australia – United States Free Trade Agreement (AUSFTA), 99% of US-origin goods currently enter Australia duty or tariff free.
But many US-made construction products include components sourced from other countries. If those materials are now subject to higher US tariffs (ranging from 10%, to China’s potential 104%), the cost of producing those goods could rise. If these higher costs are passed through the supply chain, Australian buyers who import US products might end up paying more.
Today’s confirmation of a 125% tariff on Chinese imports, along with a 90-day reprieve for other countries, is likely to influence how and when these impacts flow through to the Australian market.
The real impact depends on the specific imported materials, whether there are alternative options from lower tariffed countries, and how nimble US manufacturers are in their re-evaluation of their supply chain inputs.
The Australian construction industry, which relies on cost predictability, may need to reassess procurement strategies to mitigate potential financial risks.
It’s still early days, and the uncertainty surrounding these tariffs makes it difficult to predict their precise effects on Australian construction imports from the US. But there are three things Australian construction firms can consider:
- Watch supply chains – US manufacturers may adjust their supply chains, seek alternative sources, or absorb some of the costs themselves to stabilise prices. But price fluctuations may be ahead.
- Expect a lag – Readjusting supply chains won’t happen overnight. It may take time before we see changes filter through to Australian projects.
- Diversification helps – Construction materials are sourced from a wide range of countries, many of which have zero tariffs applied when imported into Australia, which will soften the blow.
If global trade tensions escalate and retaliatory Australian import tariffs are introduced, businesses may need to re-evaluate their costs and supply chains.
For now, staying informed and flexible are key. RLB’s team is already helping our clients to assess evolving costs and evaluate specific project risks in a shifting market. We can help your company too.
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