I was out on a multi-day hike when the US election played out. It was glorious to hear nothing but bird song and cicadas. The stars at night were crazy bright. There were, however, a bunch of satellites that unfortunately brought to mind Elon Musk. As a child, it was exciting to see a satellite; now I worry it’s another environment we humans are fouling up. In the midst of that spectrum of stars, I envisioned a bunch of mini Musks floating around in orbit spreading their brand of craziness. I returned to discover he’s been appointed head of DOGE (Department of Government Efficiency) under a Trump administration – cronk!
Yes, this is another weird segue into architecture. Outside of my fears for the fate of Ukraine, I am concerned about ol’ Trump being back at the helm of the world’s largest economy. A trade war between the US and China is not an ideal situation for the Australian construction industry.
My main fear is that we might re-enter those awful inflation dragon/supply chain disruption times we had coming out of Covid. Obviously the American voting populace didn’t hear my clarion call for some more boring, predictable politics and therefore “trade as usual” economics!
So, in this article, instead of star gazing I’ll try some crystal ball gazing, and predict how Trump at the helm may impact our local construction industry. Big deep breath – here goes nothing!
1. Delayed interest rate cuts
How long do we have to wait for some relief! The first Monday night of the month I never sleep that well. Is it too much to ask the Reserve Bank for a rate cut? Well, any sort of uncertainty in the broader economy doesn’t help. A trade war between our largest trading partners could be disastrous! I know the Reserve Bank has to consider all number of economic statistics (and politics shouldn’t be one) but I don’t like our chances of getting relief soon.
2. Increased material costs
Related to the above in that a trade war is not going to make any materials coming from China (i.e. almost everything man-made!) any cheaper. Furthermore: If Chinese exports are affected, other countries, including us, may face increased demand as alternative suppliers to the US, likely increasing local costs due to supply scarcity.
3. Reduced investment, economic uncertainty
Confidence may fall in construction investment. Uncertainty from a trade war can make investors wary, impacting the local construction sector. Businesses may delay new projects, which could reduce overall demand in the construction industry. Large infrastructure projects in Australia are often co-funded by foreign investors, including Chinese companies. Could Trump and his cronies lean on the Australian government to restrict foreign investment from China?
4. Inflation impact
If material costs increase, the cost of construction projects would increase, pushing up prices for real estate, which could lead back to point 1 – no interest rate relief or, even worse, a rate hike!
Look, I’m no economist and I hope my crystal ball gazing is as bad as my knowledge of economics. But with four years of Trump, there’s no doubt we’re in for an interesting spectacle. We’ll all just have to practise our stoicism.
