China and the U.S., two of the largest trade countries in the world, are in a fury of negotiation over tariffs on imported and exported goods that are necessary for a balanced economy and functioning society.
On Oct. 1st the two countries raised the stakes against each other by imposing 15% on $300 billion of goods. Trump has plans of raising the tariff again on Oct. 15.
The tariffs are put on a variety of everyday items, but also includes raw materials, specifically lumber and heavy machinery. This could be an issue for Arizona's already struggling construction industry.
In 2007, the U.S. experienced a recession which could be a direct correlation to the decline in development, labor shortage and expense in needed materials.
This recession ended in 2009, and the economy began to rebound. Development companies began to expand their workforce, purchasing land and buying those materials needed for development.
Arizona is one of the fastest- and largest-developing states in the U.S. If the materials are too expensive, then developers aren't able to keep up with the demand in the commercial and residential building sectors.
In Arizona, the state is enjoying one of the highest rates of construction industry growth in the country. But that doesn't mean businesses are not feeling the impact, particularly small companies and builders in rural areas, said Tom Dunn, president of the Arizona Builders Alliance in an interview with AZBigMedia.
One of the materials that continue to be in high demand for development and technology is copper. This is a big deal in Arizona, so maybe a little more on what has happened locally with materials being stolen, also adding to the costs. It is used primarily for heating and plumbing in new construction, in addition to being necessary for the heat exchangers that is in the heavy machinery used in building.
"We estimate that China's indirect copper exports to the U.S. account for 3 percent of Chinese total copper consumption per year. The list of $200 billion worth of Chinese goods contains most of the copper intensive products that China exports to the U.S., including products ranging from home appliances to electrical equipment. In our base case, we assume that the 10 percent tariffs on these goods will be maintained through 2019. Under the 10 percent tariff, most of the copper intensive goods from China still have a cost advantage over products from other countries.
Therefore, the impact on Chinese copper demand is very limited under our current forecast. However, the 25 percent tariff will make a material difference and we estimate Chinese total copper consumption will drop by 0.5 percent if the tariff is effective on a whole year basis. However, there are only 7 months remaining for 2019. This means that impact on this year's copper demand will only be around 0.2 percent to 0.3 percent on top of our current forecast of 1.9 percent growth for total copper consumption this year," said Yanting Zhou Wood Mackenzie senior consultant in statement for Snips magazine.
In addition to the increase in the price of materials, the laws for what qualifies for development have changed, which requires more materials to be used. While this may be viewed by some as a long-term solution for having better upkeep for communities and structures, it also may cause more harm financially because it requires more materials.
"The regulations keep getting bigger, the septic tanks are 65 gallons when you really only need 45, the asphalt is 3 in. when you really only need 2 in. They continue to increase the regulations because they think to have a bigger safety factor is better." said Ron Hilgart, founder and managing principal of HilgartWilson, a civil engineering company in Arizona.
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