Trump has vowed to impose tariffs on many of the goods the United States imports from other countries since the early days of his campaign.
Once inaugurated, he promised to impose 25 percent tariffs on Canada and Mexico, two of the country’s closest trading partners, among other levies on various countries the US trades with.
Since January, his plans have ebbed, flowed, twisted, and turned.
Last week, Trump raised tariffs on some imports from Canada to 35 percent from 25 percent. Cars manufactured in Canada are subject to a 25 percent tariff that’s adjusted to reflect the proportions of American parts in Canadian-made vehicles. And steel and aluminum face a 50 percent tariff.
“The two biggest importers [of steel to the US] are Canada and Mexico,” Jamie Meiser from Turner Construction, the construction manager on the Lexington High School building project, told the town’s Permanent Building Committee during a meeting last week.
Turner plans to use quite a bit of steel to build the new LHS.
If Trump keeps his promise to tax foreign steel, the cost of the new school could increase by about $8.4 million.
Here’s how Meiser broke down that estimate.
Turner Construction estimated the cost of the new high school could be about $659.7 million last week.
That includes about $384 million for materials and about $124.3 million in contingencies, which is a predetermined sum of money set aside at the beginning of a project to cover unforeseen costs.
Turner estimated the cost of materials could increase by about 2 percent, or $7.6 million, due to Trump’s tariffs.
That’s based on the assumption that Trump will impose tariffs of between 10 and 25 percent on the imports Lexington will need to build the school. One of those line items is steel, on which Turner assumes there will be a 25 percent tariff.
Julie Hackett, superintendent of Lexington Public Schools, asked Meiser why Turner assumes there will be a 25 percent tariff on steel and not a 50 percent tariff, as Trump once threatened, at a School Building Committee meeting Monday.
“Most of the steel on this project is domestic so we don’t expect to get that full 50 percent,” answered Meiser.
If the US imposes tariffs on other countries’ goods, the cost of those goods will increase. If the cost of foreign goods increases, the cost of domestic goods will also increase. But, Meiser said, the cost of the domestic product does not tend to increase as much as the foreign-made product will.
Because Turner will use mostly domestic steel, it does not anticipate the cost of the high school will feel the full effects of Trump’s tariffs.
The cost increase doesn’t stop at $7.6 million, however.
It is industry standard for municipalities to set aside a design contingency at this stage of a capital project. That design contingency is equal to 10 percent of the projected cost of materials, or in the case of the LHS building project, 10 percent of $384 million, or $38.4 million.
To plan for the effects of Trump’s tariffs, Turner added 2 percent onto that design contingency, which is equal to $795,000. That brings the cost ramification of Trump’s tariffs on the LHS building project to $8.4 million.
Turner included that figure in its estimated cost of the project. As the timeline of the project progresses, that contingency bucket shrinks, Mike Burton, who is partner at Dore + Whittier, the owner’s project manager on the project, explained during the Permanent Building Committee meeting last week.
“By May of 2027 [that $38.4 million] will be zero,” he said. “It will get smaller as we progress.”
If the money that is set aside in the contingency bucket is not used, it is typically returned to the owner, which is Lexington in this case. If that happens with this project, it will be up to the town to decide what to do with it.
In the meantime, the LHS building project team and Americans alike remain in wait-and-see mode regarding how Trump’s tariffs could affect costs.
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