Hawaii's construction industry is bracing for the impact of new tariffs imposed by President Donald Trump’s administration. The fallout from these tariffs, particularly on steel and aluminum imports, is starting to ripple through local businesses already familiar with the complexities of trade wars.

In 2018, Hawaii’s construction sector faced similar challenges when tariffs of up to 25% were placed on Chinese imports. At that time, local businesses responded by diversifying their supply chains, shifting resources from China to countries like Vietnam, Mexico, Malaysia, and Thailand. Despite these efforts, the uncertainty of the situation remained a key challenge.

Sonny Zhang, Executive Vice President of the Chinese Chamber of Commerce of Hawaii, described the difficulty of adapting to the unknowns surrounding the trade war. “They started to diversify their supplying resources from China to Vietnam, Mexico, and Malaysia and Thailand, those countries,” said Zhang. “But the challenging part is no one knows the scope... No one knows about the other countries, right? So that’s really the uncertainty.”

As of now, the tariffs have been expanded to all steel and aluminum imports, regardless of their country of origin, resulting in a 25% tariff on these materials. The tariff on Chinese imports is even higher, reaching up to 45%, due to the ongoing trade taxes.

This increase in tariffs is creating added costs for local contractors, who are now grappling with the financial burden. Timothy Ho, VP of Pacific Resources, a major supplier of building materials, emphasized the sensitivity of the industry to price fluctuations. "We’re kind of sensitive to jumps in price of anything because projects are years and years out in planning," Ho explained. “So say one of your input goods goes up by like 10%, 20%, multiply that by however many thousand times you have it, like a stud wall goes up like 20 cents, then multiply that by like a couple hundred thousand over your project and suddenly it becomes not viable.”

Pacific Resources has been supplying cabinetry, woodwork, and metal goods for significant projects throughout Hawaii for nearly 30 years, including major resorts like the Turtle Bay Resort and Andaz Maui. The company imports roughly 80% of its materials from China and other parts of Asia, and as tariffs increase, they are diversifying their supply chains, sourcing more locally, and factoring the new costs into future pricing.

Ho expressed concern over the potential delays in affordable housing and rebuilding projects, particularly in places like Lahaina. “A lot of people look at that and say, okay, so my budget is now between an extra 10% to 20%, I have to budget extra, and for many people, even small or large industries, that may be a no-go for them,” he said. “They could barely make the building work as it is, and with these price increases, it makes it even less feasible.”

Zhang noted that some projects have already been put on pause as uncertainty continues to plague the market. “I know some of the projects, contracts already put on pause on some projects because of the huge uncertainty,” he said. “They’re waiting for some clear message, the price at least to stabilize for a while.”

The construction industry has been a key driver of Hawaii’s economic recovery following the pandemic, so delays and disruptions could have significant repercussions for the state’s overall economy. According to state economist Eugene Tian, the state’s economic growth may be negatively impacted by the trade war. “It will impact the economic growth in the negative way,” Tian said. “I think for both the U.S., for Hawaii, we are not going to have a recession. It’s just slowing down in the economic growth.”

For homeowners considering renovations or new construction, the rising costs are also a factor to consider. "For the small homeowners, they put up like $150,000 for project renovation or build up additional parts of their house, so they cannot delay forever,” said Zhang. “So they just have to renegotiate new terms based on the new price or they have to pause.”

Ho advises those looking to begin projects to act quickly if they can, or prepare for the financial impact. “Now might be the time to either do it, if you can do it really quickly, or just hold off altogether,” he said. “Don’t worry, but plan, be prepared.”

As Hawaii navigates the fallout from these tariffs, businesses and contractors are facing a period of uncertainty, with rising costs and delays posing serious challenges to the construction industry.

Originally reported by Annalisa Burgos in Hawaii News Now.