Staying true to his word, President Donald Trump has enacted 25% tariffs on all goods coming from Mexico, Canada, and China, with the one exception being 10% tariffs on fuel coming from Canada. The proposed tariffs stand to have a significant impact on prospective and ongoing construction projects in 2025.
Tariffs on raw materials could cause lower margins for ongoing projects.
The largest prospective price increases for the construction industry will result from tariffs placed on materials such as steel and iron imported from China, however items such as other metal products, coatings, plumbing components, and HVAC parts, and other electrical components would also be affected. Although some types of steel may be sourced domestically, China has been ranked as the largest global producer of crude steel making Chinese imports difficult to avoid. With the proposed tariffs imposing an added tax on imports from foreign nations, these price increases may result in lower margins for some ongoing construction projects and delays or deferrals for many others. A similar effect was seen in 2020 due to increased prices on construction materials resulting from the economic effects of COVID 19.
In 2024, Steel prices had begun to drop again, although according to producer price index statistics provided by the U.S. Bureau of Labor Statistics, the price of iron and steel had not returned to pre-pandemic levels.
Although domestic goods may seem like the answer to pricy imports, increased tariffs may lead to price increases at home. With less market competition from imports, economists question whether domestic producers will support lower prices on products that have traditionally had to compete with those originating in foreign markets. It is also likely that with any significant shift in purchasing or the availability of materials, there will be a resulting impact on the supply chain for commercial builders. The full effect on the construction industry will not be known until new tariffs have been implemented and will depend heavily on the amount of the tariffs themselves and how they will be enforced. As the industry moves through 2025, it will be important to understand and plan for any challenges that increased tariffs may create.
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