On March 8, 2018, President Trump executed two Presidential Proclamations, both going into effect on March 23, 2018, which establish a 25% tariff on certain steel products and a 10% tariff on certain aluminum products. The amount of the tariffs and the origin countries subject to same are fluid concepts subject to change by further Presidential proclamation. A full copy of the Steel and Aluminum Tariff Proclamations and selected Harmonized Tariff Schedules can be found at the following links: Aluminum Proclamation and Chapter 76 of the Aluminum Harmonized Tariff Schedule; Steel Proclamation and Chapters 72 and 73 of the Steel Harmonized Tariff Schedules.

The sudden implementation of the tariffs, the broad definition of applicable steel and aluminum products (which includes raw and fabricated materials), the likely extent of resultant costs, and the potential material shortages and delays are all likely to have a significant impact on the construction industry.

The tariffs raise many questions. Who is ultimately responsible to pay for the increased costs and absorb the resulting impacts on existing projects? What additional steps must be taken in negotiating and drafting contracts for upcoming projects to address the risks and costs? Are there hidden and unanticipated impacts to consider?

The purpose of this Alert is to advise contractors of the tariffs’ potentially costly impacts, which warrant immediate attention, discussion and (and hopefully) resolution. While we suggest some steps to mitigate the risks and impacts, further discussion and analysis is recommended and all of these issues should be explored in more depth with the assistance of counsel.