Amidst LA building boom, Trump's steel tariffs take a toll

Building is booming in LA and that drives up the cost of materials. What happens when you add steel tariffs?

Ron Kong, owner of M&K Metal in Gardena. Photo by Frances Anderton.

After all, steel and other metals are everywhere -- hidden from the eye in steel framing and steel studs in drywall; and very visibly in the wavy, decorative, perforated metal claddings that can been seen on facades across the Southland, from the Petersen Automotive Museum to the Corten facades of voguish single family homes.

DnA delves into the real world impact of the tariffs -- intended to make US steel more competitive -- and learns that when overseas suppliers put their prices up, so do the domestic suppliers.

Gensler Managing Principal Rob Jernigan, whose LA office projects include the Banc of California Stadium and Metropolis residential towers, tells DnA that yes, the tariffs are taking a toll on steel and aluminum prices, but he cautions, “in the construction business and especially with projects of this size, all these items are commodities, and commodities are constantly changing, and it's something we have to consider with all of our projects. The toughest thing is a lot of projects are taking four and five years and it's trying to guess what changes in the commodity market will happen within the next two, three, four years. But we we take our best guess and go for it.”

There is so much instability right now that big builders can add “escalation clauses” into their contracts to account for unpredictable price hikes down the line, explains Ron Kong, director of M&K Metals in Gardena. The smaller contractor has less of a buffer.

“Small business people… don't have that type of language built into there. The general (contractor) is going to make them build it for the price that they contracted and if the price of the steel goes up by 25 percent, they'll have to absorb that.”

Price hikes notwithstanding, metals are in high demand, as DnA found out when it toured M&K Metals.

Pointing out “rows and rows of steel tubing, steel angles, steel pipes, stainless aluminum, brass, copper, in a variety of shapes,” Kong explained that he sells to people that do cabinet making, or it could be people in aerospace who want “to figure out if two things will work. Or they don't want to blow up a satellite, so they blow up models of satellites.”

Then there are the high-rise towers under construction in downtown LA, the Rams stadium in Inglewood and many boutique projects by artists, architects, landscape designers and also “mothers who wish to have an art project in their house for their daughters,” based on “something on Etsy.” After pursuing law and an MBA, Kong joined his father in the metals business. It’s one he loves; he likens himself to a “farmer,” as in “the guy that a master chef would go to” to get the ingredients, in this case metals, to blend into a beautiful new dish.