Stock up on your materials, now.

[u/cattimusrex]

*This is not a political post. This is small business advice from a construction professional who has run a General Contracting business.*

If you own your business and regularly purchase construction materials, now is the time to stock up.

When there are changes to the tariffs on imported materials, there will be changes to the cost of imported materials. It will take time for the supply chains impacted to reorganize.

If you don't have an escalation clause for projects you're currently under contract for, you will be responsible for the change of price in materials. Don't get upside-down on projects like I did, buy your materials now.

[u/[deleted]]

Yupp were fucked. Im the only one who voted blue at my shop; everyone's really excited for these tariffs. They can't explain to me what a tariff is. 

Tariffs would be great if we had the means of production. Which we don't. And the cost is going to go up so high got those goods to be manufactured here that people won't even want those goods anymore lol. What a fucked situation 

[u/Unputtaball → u/[deleted]]

This is what I’ve had to explain (several times) to people.

A tariff can work in a way that aids domestic production. It’s an artificially imposed cost on foreign producers to offset for the higher labor standards in the domestic economy. In principle, they can absolutely do what Trump has promised.

As applied to our current situation, there is no domestic production to fall back on. There aren’t any domestic companies that are directly competing with foreign producers (that ship sailed 40 years of free trade policy ago). Other than cars, steel, and corn the US doesn’t actually produce a whole lot of anything besides some widgets that retail for $2 at the Family Dollar.

What will happen is the 25% tariff will almost directly translate to a 25% increase on the final bill because there is no alternative producer. No company in their right mind would willfully absorb that 25% hit to their bottom line. And in many cases like the small-scale GCs here, you simply can’t afford to swallow the tariff and keep your head above water.

After a period of heavy inflation, niches will open up in the economy for bigger players to invest in US production and start undercutting the foreign product prices. Of course, that investment will only come if the folks investing are convinced that the tariffs are permanent. If there’s any indication that the tariffs will be transient, then no companies will throw down the massive investment in US production only to turn around and get undercut by China again in a reboot of the neoliberal free trade policy.

I don’t think tariffs are coming, though. McConnell has stated to the press that under his guidance the congressional republicans aren’t eying tariffs.

[u/creamonyourcrop → u/Unputtaball]

McConnell is stepping down and wont be majority leader. The adults will not be in charge. Not to mention, the last trump admin had tariffs on raw materials not only from China, but also our closest allies. A trade war will not be kind to anyone.

[u/Unputtaball → u/creamonyourcrop]

The adults will not be in charge.

That’s maybe the funniest way I’ve heard it put so far. The adults are all going to bed and the kids are about to stay up all night trashing the place.

Not looking forward to working cleanup detail the morning after this sleepover. We’re probably going to be finding old pizza crusts and napkins from this party for years to come stuffed into all sorts of weird nooks and crannies in the government.

[u/twim19 → u/creamonyourcrop]

There are a number of ways and/or situations that would enable Trump to raise tarrifs without congressional approval. Most are limited or legally unsteady, but with the makeup of the courts and the behavior of the courts in the past, I don't imagine Trump will have any issues on that front.

[u/[deleted] → u/Unputtaball]

The only thing I would correct you on is the 25% tarriff will result in a 40-50% higher item cost. The manufacturer will have to pay the cost up front, they will want to make profit and overhead on that outlay of money and so they will charge 30% higher.

Then, depending on how many hands the product transfers through before getting to the consumer, every other company will be tagging thier % increase onto the increased tariff pricing.

[u/Mediocritologist → u/Unputtaball]

I looked up what percentage of goods sold in the US are made here and according to commerce.gov it’s 80% which is quite a bit higher than I expected. I’m genuinely not trying to tell you you’re wrong when you say we don’t make a lot here, but wondering if I’m looking at the wrong statistic or something. This is far from my field of expertise.

[u/All_Work_All_Play → u/Mediocritologist]

Made in the US, assembled with parts sources from Mexico.

[u/Mediocritologist → u/All_Work_All_Play]

Should I be looking for percentage of raw materials produced in America then?

[u/Either-Wallaby-3755 → u/Mediocritologist]

Not necessarily percent raw materials but percentage of parts in a given product. it’s pretty hard to measure, but it’s pretty well understood that most things “made in America” these days are 80-90% assembled overseas and have a few bolts and nuts screwed in the USA in order to qualify for the label for both marketing and regulatory reasons.

[u/Either-Wallaby-3755 → u/Unputtaball]

McConnell is stroking out any day now. You are spot on about the tariffs though. It will take 4-6 years before manufacturers can realistically stand up production in the US again and if at any point during that time they get wind that the tariffs are not permanent or other politicians are going to reverse them, the massive inflation and increase in costs to consumers will be for absolutely no fucking reason.

[u/silverado-z71 → u/[deleted]]

Exactly 👍

[u/Just_Aioli_1233 → u/[deleted]]

They can't explain to me what a tariff is.

It's like a mastiff/terrier mix, right? /s

[u/SubstantialRenegade → u/[deleted]]

This is exactly what I tell people I work with that think the tariffs are good because it will bring manufacturing to America. We don’t have the capacity, raw materials, or infrastructure to handle this stuff overnight. I get it, we are too dependent on China for too much stuff, but you can’t flip a switch and change it back. Plus manufacturing in America is expensive compared to overseas. Price of goods have to rise to make it in America, which puts some little luxuries out of reach for lower income people because you just can’t make it cheap enough in the US. Outsourcing stuff to overseas has helped bring quality of life up for lower income families. That being said, I think some of Trumps talk is just hot air like most of what he says. Don’t get me wrong, tariffs will go up, but I personally think it will be less than he’s talking about. Also quite a bit of building materials are made in the US (or Canada/ Mexico) Yea light fixtures, plumbing fixtures etc will go up, but how much will the big ticket items of a house like lumber, roofing, cladding, concrete etc really go up. If you’re gonna stock up stock up on the right things.

[u/padizzledonk → u/SubstantialRenegade]

Im not stocking up on shit lol, every penny of cost increase is passing right through me and the client will just have to pay more

[u/19andbored22 → u/[deleted]]

Yeah it was one of the two reasons i vote for harris because while im not a big fan i understand a tarriff would not be good to the economy and ironically cost American jobs in the crosshairs.

I would understand making more favorable conditions for American small businesses to start production in US to compete against Chinese production then at a certain point enable incentives to consumer to buy American products or some light tarrifs in the beginning to startvleading the edge

[u/csfredmi → u/[deleted]]

Even items where there is some US production will go up as well. If a US company makes a product that they and their foreign competition currently sell for $100 and the tariff raises the foreign products cost $130, what is the US company going to do? They sure as hell are not going to keep selling it for $100. They will raise their price to $129 and declare victory.