President Donald Trump

What Types Of Effects Will President Trump Have On Construction?

When the smoke cleared on the 2016 Presidential Election, Donald Trump was given the okay to change his name to President Trump in late January 2017. Throughout the entire campaign, both Trump and Democratic nominee Hillary Clinton talked about the construction industry and helping it to get back on its feet. What was frustrating for the industry is that both candidates said a lot about construction, but neither gave any specifics.

In late 2015, President Obama signed the $305 billion Fixing America’s Surface Transportation (FAST) Act into law to help boost the slagging construction industry. It is a five-year program funded by taxpayer money and aimed at improving the ailing American infrastructure and creating jobs. The intent sounds good, but the law itself lacks clarity. For one thing, there is no wording on exactly where the money will come from. The construction industry looks at the FAST Act as a good start, but much more needs to be done by President Trump.

The President Elect’s Focus Is On InfrastructurePresident Donald Trump

When the federal government gets involved in creating construction jobs, it usually does so by introducing infrastructure work. There are two types of infrastructure work in the United States; work that generates recurring revenue, and work that does not generate recurring revenue. The government often looks to get private investment for revenue-generating projects to keep the burden off the taxpayers. Donald Trump’s plan for infrastructure development involves a lot of money and a lot of development.

Why Focus On Infrastructure?

The American infrastructure is badly in need of repair and updating, and not doing so can have tremendous implications. The American Society of Civil Engineers said that the crumbling American infrastructure could cost the American economy around 2.5 million jobs and an estimated loss of $4 trillion in gross domestic product by 2026. There is a $1.44 trillion gap in infrastructure funding that has been kicked down the line from one congressional session to the next that is critical in solving these issues.

If that funding gap is not closed by 2040, it could grow to an astronomical $5.18 trillion. This funding includes needs in the revenue-generating infrastructure (toll roads, airports, and utilities) and non-revenue projects such as new roads and bridges. Both candidates were aware of the pending infrastructure crisis, and Trump says he has a plan to fix it.

The Trump Infrastructure PlanConstruction mason worker bricklayer

Donald Trump recently laid out a $1 trillion infrastructure funding program that would not cost the American taxpayers anything. The money would come from private investments with the investors seeing returns from revenue generated by the various airports, toll roads, and utilities that are built. With Trump’s plan, the government would retain the right to dictate pricing for all of the services created and the government would have a strict payment schedule in place for each investor.

Investors would also be offered a tax credit that would be balanced by the income taxes generated by the workers who would be on the projects and corporate taxes from the construction companies that managed each project. With interest rates still low, Trump and his team are confident they can get the kind of investment they need to make this project successful.

What The Construction Industry Is Saying

The construction industry has mixed feelings about Trump’s $1 trillion plan. On the one hand, such an extensive project would make skilled careers in the construction industry popular again. There is a concern that the industry would not be able to take on these projects due to the current lack of skilled workers available. But industry experts insist that the wide availability of large and long-term construction projects all over the country will attract the talent needed to get the job done.

All of this good news does not stop the construction industry from having second thoughts about whether Trump’s plan will even get off the ground. Industry executives were asked before the 2016 election produced a Republican congress and president if they felt the American government could approve and successfully administer such an aggressive program and many said they did not. But now that the Republican party controls the federal government, it may be able to bring together the resources to get this program going.

The other concern is the vague nature of how Trump intends to raise the money. While his plan sounds great because it does not involve taxpayer money, Trump also does not give any specifics on how he will bring in investors and who he is planning on targeting. The size of this infrastructure funding program is unprecedented, and there is doubt in the construction industry that it can even become a reality.

What About Housing?

The construction industry was dismayed at the lack of attention both candidates gave the housing construction industry. The pace of recovery for new housing has been very slow due in large part to costs tacked onto building costs by the government. The housing industry estimates that the cost of building a house right now is inflated by 24.3 percent because of government fees and regulations.

When Donald Trump met with housing construction industry members, he understood their issues and offered some promising solutions. Trump indicated that he would immediately cut away any part of the bureaucracy that hinders the growth of the construction industry and affects jobs. He said he would lower corporate taxes to 15 percent and he would appoint a Supreme Court justice who would assist the construction industry. Trump was unclear how appointing a Supreme Court justice was going to help home construction, but the industry members liked what they heard.

After years of dealing with the federal and state governments, housing construction industry experts are hesitant to get too excited about Trump’s plans. While the measures sound like they would help the construction industry to grow, it is a wait and see approach to see if those measures are put in place.

Will Foreign Construction Be AffectedWork in progess caution

The election of President Trump could have an effect on the construction industry in the Gulf Corporation Council (GCC). These are countries in the Persian Gulf region such as Dubai and UAE that enjoy significant real estate investments from American investors and corporations.

Members of the GCC indicate that if a Trump presidency has a prolonged negative effect on futures and the stock market, then that could see an increase in American investments into GCC real estate. Investors tend to shy away from a weak market and prefer to put their money into tangible investments such as real estate and gold.

While the GCC countries are interested to see how the American economy reacts to a Trump presidency, the idea that a weakened American economy will spur investment in GCC real estate is not a widely held notion. Many members of the GCC construction industry do not expect the Trump presidency to have any kind of meaningful effect on the American economy for some time.

While millions of Americans start the process of adjusting to a President Trump, the construction industry is ready to go to work. But after months of meetings with both candidates, all the construction industry really has are vague ideas and potentially empty promises. As it goes when a new presidential administration takes power in the United States, it will take time to see if promises will be kept and jobs will truly be created.

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