In a little more than two weeks, there will be an additional $250 billion worth of imported Chinese goods that are going to face tariffs if the U.S-China trade war doesn’t find a truce. The import tax is going to increase from 25% to 30% and, with no backing down from China, another 15% will be put on $160 billion worth of Chinese products on December 15. This could create an issue for a number of industries and Las Vegas casino development might be hit hard. The tariffs are driving up the cost of steel, and Vegas construction isn’t willing to pay the price.
China is the largest exporter of steel in the world and many develop projects have been budgeted around the metal. With a significant material price increase, it would become overly burdensome for developments in Las Vegas, and elsewhere to consider eating the difference and the projects are having to reconsider their future.
Jeremy Aguero, an analyst with Applied Analysis, told the Las Vegas Review-Journal, “We are hearing more about projects that are re-evaluating moving from planned to under construction due to increased development costs.”
According to data available from the Las Vegas Convention and Visitors Authority (LVCVA), Vegas is currently looking at several massive projects with around $15.2 billion being spent either on under-construction projects or planned projects that would have otherwise opened between now and 2022. Among these are Resorts World Las Vegas, The Drew (formerly Fontainebleau), the Hard Rock-to-Virgin transformation and the possible purchase and renovation of the Palms by Red Rock Resorts.
Another project is going to push forward, but is going to have to figure out how to cover the difference in cost. A new sports and entertainment complex is popping up on the Vegas Strip, backed by former NBA star Jackie Robinson, and its cost has increased to $3 billion from its estimated $2.7 billion as a result of the higher price of steel, as well as increased labor costs.