Tariffs driving up infrastructure construction costs, analysis shows

Dive Brief:

The price tag for a potential $1 trillion-plus U.S. infrastructure program could increase by millions when adding in the extra costs of President Donald Trump’s tariffs, Bloomberg Businessweek reported.
In an analysis of the Environmental Protection Agency’s cleanup of the Lower Rouge River in Detroit, Michigan, for example, Bloomberg found that costs for the $10 million bulkhead wall component of the $63.6 million project had increased by $1.3 million because of the president’s 25% tariff on steel imports. The project is using steel sourced from China. The EPA is absorbing about half of the increase, as is the agency's project partner Honeywell International, but taxpayers will ultimately pay for the government’s share, and it could come out of other projects’ budgets.
This scenario could play out among future projects and limit the scope of a possible nationwide infrastructure program if Democrats and Republicans can come to an agreement on how to fund it. Other projects that reportedly have been affected by the tariffs are the $1.5 billion to $2.1 billion Los Angeles-area Metro Gold light-rail project, a $135 million wastewater treatment plant in Utah and the $3.6 billion Hampton Roads bridge and tunnel expansion.

Dive Insight:

The Wall Street Journal recently reported that the Trump administration might be willing to make some compromises in order to seal a deal with Democrats for the type of massive infrastructure program that failed to get off the ground last year. Insiders told The Journal that the president was even reconsidering a caveat that local governments foot 80% of the bill of their projects and was willing to up the $200 billion limit he had put on the federal share.

The president might also be willing to reconsider his position on the $13 billion Hudson River tunnel project between New Jersey and New York City, part of Amtrak's $30 billion Gateway program of upgrades to the Northeast megalopolis’ rail infrastructure. After a recent meeting with the president and Transportation Secretary Elaine Chao, New York Gov. Andrew Cuomo said the president was considering "next steps” toward funding after Cuomo showed him videos and photographs of how damaged the aging tunnel was, particularly after Superstorm Sandy.

Cuomo said he and the president discussed the possibility of tackling the project using a public-private partnership, a turnaround from the president’s resistance to honor a reported deal President Barack Obama's administration had made with Amtrak, New York and New Jersey to pay for half of a new tunnel’s costs.