Moody's: Positive Outlook for Building Materials at Risk From Tariff Threat

While the outlook remains positive, the 25% tariff on steel imports could revise it based expectations for decelerating growth

Moody's Investors Service

According to a newly released update, Moody's Investor Services notes: "Our positive outlook remains supported by increasing public spending, momentum in single-family home construction spending, and indicators of growth for nonresidential construction spending," says Karen Nickerson, Senior Vice President at Moody's. "However, if 25% tariffs on imported steel proposed by President Trump are instituted, we could revise our outlook to stable based on our expectation for decelerating growth."

The report adds that the tariffs will undermine nonresidential construction spending and public construction spending due to costs increases for those projects utilizing steel. This represents a large percentage of projects since the construction industry consumes approximately 50% of steel production. Higher costs could impede project starts, as well as consume a higher percentage of available funding, reducing available funds available for future projects. 

Click here to download the full update.