The owner of a construction machinery firm has expressed frustration after a major order was cancelled days before shipping because of US president Donald Trump’s controversial tariff campaign.
Richard Finch, director at Suffolk-based Plant Parts, described himself as “irritated” after a wholesaler with depots across the US opted not to proceed with a £350,000 delivery in light of the increased import duties.
His comments came as FTSE 100 contractors continued to see their share prices fall on Monday (7 April), leading a key industry figure to warn that the tariffs could cause a “big problem” for UK construction.
Noble Francis, economics director of the Construction Products Association, told Construction News that the tariffs could cause a potential “sharp slowdown in global economic growth” unless Trump reversed them.
It comes as Trump announced a 10 per cent levy on all goods brought into the US from abroad, with higher charges for certain products and particular origin countries.
The US president had previously slapped a 25 per cent tariff on all steel and aluminium imports.
Plant Parts sells hydrostatic gearboxes for a range of construction machines including excavators and bulldozers.
Finch told CN the firm sells to more than 100 companies per year, with cross-Atlantic trade increasingly important since Brexit reduced the proportion of business it carries out in the EU.
“We had a container ready to ship, about £350,000 of equipment, going to a wholesaler in the US,” he said. “I had got the stock together specifically for the order.
“Then I got a call about three weeks ago when the first tranche of tariffs came along on metal. The delivery was stopped a few days before it was due to leave. I had to cancel the container.”
Finch said his customer would have been hit with a bill equivalent to about £87,000 when the ship docked unless import duties were reduced.
“It is so unpredictable from his point of view. It would take six weeks for the delivery to get to him and it could all change again.”
He described the cancelled order as “a nuisance, a pain in the backside” and said he was “irritated”.
Share prices hit
Big-name tier one contractors were hit by the malaise in the FTSE 100 in the wake of last week’s tariff announcements.
Balfour Beatty’s share price fell 13 per cent from 429.2p at 8am on Friday (4 April) to 374.6p at the same time on Monday (7 April) before recovering slightly to 394.8p at 8am on Tuesday (8 April).
Kier’s stock value dropped 11 per cent from 122.6p at 8am on Friday to 108.6p at opening on Monday before climbing back up to 118.0p at 8am on Tuesday.
And Morgan Sindall’s share price plummeted 9 per cent from 3,305p at 8am on Friday to 3,022p exactly three days later. It reached 3,165p at 8am Tuesday.
Francis said 15 per cent of UK construction products were exported last year, with the US the second largest market for these goods, taking around £1bn-worth across the Atlantic.
He said uncertainty created by the impact of tariffs on global trading patterns was “a big problem”.
“If investors and clients don’t know the risk, they can’t price it in, so the most obvious thing to do is pause all decision making, new tenders and signing contracts,” he warned.
Calum Mair, commercial director North America for equipment parts supplier EPD, predicted worldwide increases in construction costs in the wake of the tariff hikes.
“UK businesses could face further pressures from rising material costs and disrupted supply chains and should consider diversifying suppliers, which can reduce dependency on vulnerable trade routes,” he said.
“They should also consider stockpiling critical materials, leveraging technology for logistics and focusing on no or low-tariff jurisdictions.”
Law firm Clyde & Co called for contractors to review their paperwork.
“When faced with this level of geopolitical volatility midway through a project, parties may find they do not have sufficiently robust contractual protections,” it said.
“The first step is to review contracts to understand risk profiles and entitlements to time and money. Although infrequently used and often very complicated, most standard-form contracts include optional indexation of cost-fluctuation provisions. If this is the case, ensure these have been managed and updated appropriately. Informed decisions can then be made to mitigate price volatility.”
Opportunities
Meanwhile, Finch has become more sanguine about the impact of tariffs in the days since his order was put on hold.
“It is the new reality,” he said. “There are also opportunities. Canada has almost stopped buying from America because of reciprocal tariffs so it has opened up the market to us. And we have always struggled in South America because they are very price sensitive but Trump has given us a 25 per cent headstart.”
He also believes the US market will return.
“In the short term there will be a drop as people let stocks run down but they will have to start buying again or they will have nothing to sell. Even if America decides to make everything itself, it would take years of infrastructure building to get into that position. In the medium term I am sure it will return to somewhere near normal.”
He hopes some of his cancelled order will eventually make its way to its intended customer, while other elements could be sold to customers in Europe or elsewhere.