What will a Donald J. Trump presidency mean for the contracting market? Like a Rorschach test, it seems the answer depends on your perspective.
“If I’m inclined to like the results of the election, I might see a lot of benefits. But if I’m inclined to dislike the results I might see a lot of dire consequences,” said Kermit Baker, remodeling futures program director for Harvard’s Joint Center for Housing Studies.
But Baker and others say the uncertainty about a Trump presidency is also due to the lack of details the candidate provided during the campaign. As a result, while elections typically end a period of uncertainty, this one seems only to have heightened it.
“I’d like to believe in the best of people but I’m fearful the masses will view him as a loose cannon and that there will be a lot of uncertainty. And uncertainty isn’t good for the market,” said Robert Criner, owner and president of Criner Remodeling. “But once he settles into the position I think he’ll do a wonderful job.”
Pros like Criner view Trump — a famous real estate development and construction mogul — not just as a new commander in chief, but also as a contractor in chief. “He’s very appreciative of the skill set we bring to the table and the issues of dealing with all the rules and regulations,” he said.
Both the National Association of Home Builders and the National Roofing Contractors Association seem to share that viewpoint. NAHB pointed out that this is the first time Republicans control the White House and both chambers of congress since 2005-2006, though it acknowledged the nation remains “deeply divided.” NRCA laid out the following policy agenda that’s in line with Trump campaign promises: pro-growth tax policies, relief from “burdensome” regulations and workforce legislation and replacement of the Affordable Care Act with a market-based system.
But those are just a few of the ways a Trump presidency could affect contractors. Here are seven potential impacts:
1. Trade. Trump was vocal about renegotiating trade deals such as NAFTA. But those efforts could also start trade wars that lead to tariffs on imported goods. Baker warns that could in turn make construction materials more costly, especially those that are produced offshore. “It’s going to affect prices and availability,” he predicted.
2. Immigration. Trump’s now notorious stand on immigration — he has pledged to remove 11 million undocumented immigrants — could have a huge impact on contractors who rely on immigrant labor, said John Gorman, president of Save Energy Company. Currently, Gorman said about 80 percent of his workforce is Hispanic, “and I don’t think I’m the only one in that boat.” Meanwhile, the industry is faced with a severe labor shortage, which an immigration crackdown would only acerbate. “It’s going to put pressure on work force issues that are already pretty serious,” Baker said.
3. Vocational education. One of the specifics Trump mentioned during the election was adding vocational education program back to high schools. Such programs could eventually ease labor shortages. “We finally have someone who has specifically mentioned trying to elevate and increase technical vocations,” said Criner, who’s also past chair of NAHBR. “That’s a big plus for us.”
4. Infrastructure investment. Trump has said he wants to invest $1 trillion over the next 10 years in new public works projects such as roads and bridges. That’s double what is currently being spent, Baker said. “We’re talking about adding an additional year to infrastructure going forward,” he said. But while that program would be a boon for contractors overall, it would also likely heighten the labor shortage, Baker added.
5. Reducing regulation. During a campaign stop, Trump actually spoke directly to the NAHB about his plans for scaling back regulations that slow down construction. One promise: for any new regulation Congress puts forth, two outdated regulations must be eliminated, said Shawn McCadden, Remodel My Business consultant. What’s more, McCadden said Trump is more likely to look to the industry for regulation guidance than the “current political class.” “If we do it right, as an industry and through trade associations, we’ll have more of an opportunity for a voice in the government that we’ve had in the past,” McCadden said.
6. Finance. “We need to advance comprehensive housing finance reform with federal government acting as a backstop in times of crisis…” said NAHB in its election results statement. Currently, that backstop is the quasi-public mortgage companies of Fannie Mae and Freddie Mac. But if Trump moves to privatize those companies, that backstop will be missing, Baker said. “Without the presence of Fannie and Freddie there would be much less capital for housing and potential serious capital shortages,” he said. “That would have a direct affect on remodeling and contracting.”
7. The Affordable Care Act. NRCA specifically put repeal of the ACA on its agenda, and that mirrors what candidate Trump promised. Contractors like Criner said they expect a more market-based system will lower health care costs and provide more options. But others such as Gorman are worried about what will happen to those who now have coverage under the ACA. “I understand the knee-jerk reaction, but will we do after that gets repealed?” he asked.
Ultimately, everyone seems to agree that when it comes to questions such as those, only time will tell. “With Trump, it’s still a little bit of a work in progress. He doesn’t have a traditional Republican philosophy so there’s a fair amount left to the imagination in terms of how these programs are going to develop,” Baker said. “It’s going to be an interesting ride over the next few months.”
