From ports to projects: Estimating the impact of supply chain volatility and trade policy changes on construction material prices

Construction material markets are often reliant on imported commodities. Import tariffs and temporary trade barriers disrupt supply chains, presenting stakeholders with uncertainties regarding how such disruption impacts construction material prices. Despite the plethora of research efforts that examine the effects of economic conditions on construction material prices, the impacts of the import quantities remain understudied. This paper fills this knowledge gap usig a multistep methodology. First, the prices of major construction materials and the quantities of the relevant imported commodities are retrieved. Second, the stability of their historical trends was assessed using econometrics-based tests. Third, a nonlinear autoregressive distributed lag (NARDL) framework is employed to investigate the potentially asymmetric impacts of increases and decreases in import quantities on the construction material prices. The framework is demonstrated using the prices of 15 construction materials in the United States and import quantities from Canada, Mexico, China, and world total. For the 15 materials, prices respond asymmetrically to import shocks; increases and decreases in import quantities have unequal effects for at least one source country. Mexican hot-rolled steel surges are followed by a 2.5% rise in US prices in the long term, while a 10% increase in Canadian fabricated metal imports is accompanied by a short-term price decline of 0.66% at a five-month lag. The results indicate that local production capacity of cement and concrete and crude oil prices drive cement-dependent material prices more than import flows. Due to construction supply chain effects, the prices of prefabricated structural wood members increase by 18.1% in the long run when global lumber imports decline. By modeling how import shocks propagate through upstream and downstream prices, the NARDL framework facilitates prescient procurement strategies of construction materials amid persistent supply chain volatility and evolving trade policies. Owners, contractors, and other associated stakeholders can simulate a shift in steel, cement, or lumber inflows months ahead, identify vulnerable supply lines, and adjust budgets, bids, and contracts proactively.