What Trump’s victory could mean for US construction - Construction Briefing

06 November 2024

Donald Trump has sealed victory in the race for the White House, following a fiercely fought US presidential election.

Declaring the win in a speech given to supporters in Florida, Trump said, “America has given us an unprecedented and powerful mandate”.

What might he do with that mandate when it comes to issues affecting the US construction industry?

It’s still early days and the clamour from organisations representing different interests across the sector has already started, as they attempt to draw the attention of a new administration to issues that affect them. (See reaction below).

So how is Trump’s second term as US president likely to differ from the Biden/Harris administration’s approach as far as construction is concerned?

A major initiative of the Trump presidency was implementing an ‘America First’ economic policy, which included shifting the country away from multilateral free-trade agreements and toward bilateral trade deals (the exchange of goods between two nations).

As part of this policy, Trump’s administration imposed sweeping tariffs on imported goods, particularly from China, including materials vital to the construction industry: solar panels, steel, and aluminium.

While nearly every country importing goods to the US was handed the tariffs, the most tariffs and the highest rates were levied on Chinese imports. Biden eased much of the Trump-era tariffs, particularly for governments of US allies, but he recommitted to imposing the charges on Chinese goods back in May.

Biden not only kept alive the more than US$300-billion-worth of tariffs his predecessor implemented but added another $18 billion to a new list of Chinese goods incurring tariffs, including electric vehicles, batteries, semiconductors, solar cells, and ship-to-shore cranes.

While it is hard to project exactly what another round of a Trump-China trade war would look like, a Trump presidency is not expected to be too different in this respect than the current Biden administration, at least in the short-term.

He has proposed tariffs in excess of 60% on Chinese goods and ending China’s ‘most-favoured-nation’ trading status. Tong Zhao, senior fellow at the Carnegie Endowment for International Peace, told Reuters, “Beijing is particularly wary of a potential revival of the trade war under Trump, especially as China currently faces significant internal economic challenges.

“China also expects Trump to accelerate the decoupling of technologies and supply chains, a move that could threaten China’s economic growth and indirectly impact its social and political stability.”

However, there are some doubts over whether Trump could effect an across-the-board 60% tariff on Chinese imports. The president has the authority to raise tariffs either in retaliation for unfair trade practices by other countries, or on national security grounds. There are question marks over whether he could use either of these justifications in the case of Chinese imports.

During his first term as president, Trump’s administration passed the Tax Cuts and Jobs Act (TCJA), which became law in 2018. The major implication for the construction industry came from a novel flat tax rate (21%) compared to a tiered tax rate that ranged from 15% to 39% depending on the amount of a firm’s taxable income.

Portions of the tax law also favoured companies with overseas operations. The law changed the US from a global to a territorial tax system in which each subsidiary of a company pays the tax rate of the country in which it is legally established (saving the difference between the US’ generally higher tax rate and the lower tax rate where the company is established).

Portions of the tax law are set to expire for individuals in 2025, however, the corporate tax cuts are permanent until (if ever) amendment by law.

The ABC praised the introduction of the TCJA. In a letter to Trump’s campaign, ABC president and CEO Mike Bellaman and Buddy Henley, chair of the ABC’s board, called for Trump to provide small construction businesses with “tax certainty and fairness”.

In addition to changes to taxes, Trump’s second term as US President could see further industry deregulation. His first term saw the introduction of Executive Order 13771 (2017) which mandated that any executive department or agency of the government remove two regulations if it wished to implement a new one.

Biden rescinded the order when his presidency began in 2020 but the same executive order or a similar one is likely to resurface under Trump’s new administration. A split Congress could be less likely to pass extreme deregulation measures, however at the time of writing, the Republicans look to have taken control of the Senate, with the House of Representatives still up for grabs.

Meanwhile, amendments to the Davis-Bacon Act – a US federal law regulating labour wages – which have been subject to legal challenge by both the AGC and ABC cannot be undone unilaterally by a president.

Project 2025, a policy gameplan written by conservative think-tank The Heritage Foundation, the authors of which are connected with Trump and his former administration, called for a complete overhaul of the DBA. However, the US House of Representatives and US Senate would need to agree to such an action.

Trump has set out a plan to deport record number of immigrants, potentially mobilising agencies across the US to assist with it. Part of that plan involves using the wartime 1798 Alien Enemies Act to remove suspected gang members from the country.

Such a move could create shortages of labour in industries that rely on immigrant labour, including the construction sector, if people were deported in sufficiently large numbers.

However, mass deportation programmes are expected to draw legal challenges, and if Trump were to attempt to effect mass deportations (his Vice President-elect JD Vance is reported to have estimated that such an operation could remove a million people a year), then it would rely on the substantial involvement of the US National Guard or state and local law enforcement as well as the increased provision of detention space.

That, in turn, would require a significant budget. The American Immigration Council, which is an immigrant advocacy group, has put the cost of deporting 13 million immigrants in the US illegally at $968 billion over a little more than a decade. For those reasons, some consider deportations on a scale likely to impact the construction labour supply unlikely.

Here’s how organisations representing the interests of construction companies have reacted to Trump’s win so far:

Trump’s win was welcome news in the offices of the Associated Builders and Contractors (ABC), a national trade association that represents 23,000 members that endorsed Trump.

ABC President and CEO Michael Bellaman was quick to issue a statement congratulating Trump on his victory. “This is an exciting day for our industry. ABC is optimistic about the future of America’s construction industry and the opportunities to advance policies that protect free enterprise, reduce regulatory burdens and expand workforce development,” Bellaman said.

Predicting that construction will “thrive” under Trump, Bellaman said the ABC looked forward to working with the incoming administration on issues like the skilled labour shortage, regulatory burdens, inflation and tax “challenges”.

ABC’s decision to endorse Trump was based on President Joe Biden’s administration’s move last year (2023) to mandate project labour agreements on federal and federally assisted projects that cost $35 million or more, arguing that it was bad for business.

The move, which was also opposed by the politically neutral Associated General Contractors of America (AGC), was seen by the associations as an impediment to non-union workers and businesses working on federally funded projects.

Other organisations have struck a more politically neutral tone when it comes to news of Trump’s election.

Doug Carlson, the CEO of the National Utility Contractors Association (NUCA) congratulated Trump and took the opportunity to remind Washington D.C. that there is an estimated $1 trillion in essential water infrastructure needs across water and wastewater systems over the next 20 years.

He called for plans to start on finding the funding required for those works.

“America’s infrastructure issues are nonpartisan. A leaking water service main, or Americans without clean water is everyone’s concern. And that is just the start. Americans are counting on Congress to responsibly deliver the billions of dollars in construction for the roads, bridges, energy, and broadband infrastructure our nation needs,” he added.

Meanwhile Brian P. McGuire, CEO of Associated Equipment Distributors (AED), which represents companies involved in the sale, rental, manufacturing and support of construction equipment, also congratulated Trump.

He called for bipartisan cooperation. “We must rise above gridlock and inaction. Together, Republicans and Democrats have the responsibility to maintain a tax code that fosters growth, to invest in our infrastructure and rural communities, and maintaining and nurturing the next generation of skilled workers who will shape our future,” he said.

Construction trade unions are likely to be less enthusiastic about the result, after several of the largest organisations representing workers (including North America’s Building Trades Unions, United Brotherhood of Carpenters and Joiners of America, and the International Brotherhood of Electrical Workers) backed Kamala Harris.

That decision was based on support for a raft of legislation introduced under Biden’s administration, including the Infrastructure Investment and Jobs Act, the Inflation Reduction Act, and the Chips & Science Act, which have led to billions of dollars worth of investment in construction projects across the country, bolstering construction jobs.

At the time of writing, none of the unions mentioned above had issued a statement on Trump’s victory.

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