A new round of tariffs on foreign steel and aluminum is expected to drive up construction costs across multiple sectors, according to panelists at a June 3 webinar hosted by Skanska USA. The latest move—an increase from 25% to 50% duties announced by former President Donald Trump—adds to the pressure builders are already facing in a volatile materials market.

Rob Cantando, national director of strategic supply chain at Skanska, said, “We’re still digesting the most recent announcement of the steel and aluminum tariffs doubling. We’re going to be working with our supply chain partners to assess that impact over the coming weeks.”

According to one Skanska case study, the doubled tariffs could add approximately $22 million in costs to a $375 million healthcare development. A substantial portion of that increase is linked to steel and aluminum derivative components used in building assemblies. Panelists noted total project cost increases from tariffs could reach as high as 8%.

However, not all materials are equally affected. Cantando explained that some manufacturers who had earlier announced price increases for materials like drywall, lumber, and steel studs are now pulling back slightly. “Many of those markets that shot up early when the first round of tariffs were announced are giving back some of those gains as these new tariff policy changes are accounted for,” he said. “In addition, manufacturers and suppliers are taking action to remain competitive. Many of them are shifting sourcing and materials to minimize the impact of tariffs. In some cases, tariffs are being partially absorbed by the supply chain.”

Despite some resilience in pricing, panelists warned that uncertainty remains a dominant force in the market. Cantando noted that “structural steel escalation is hovering around 5% to 8%, but that could rise quickly.” He added that prices for coil-based steel products like hollow structural sections and bar grating have already jumped as much as 50% since January, while Midwest aluminum premiums surged 54% following the tariff announcement.

In response, some companies are shifting logistics strategies. Sarah Andreasen, director of North American sales at Kawneer, said the firm has been working to reduce its tariff exposure. “For us, it’s been all about rediverting our supply chain,” she said. “We have had to do a lot of work, set up production capability in different plants so that we can mitigate those types of transactions from tariffs.”

Kawneer’s commercial construction products, such as aluminum windows and curtain wall systems, are used in a wide range of nonresidential projects including schools and hospitals.

On the steel side, contractors are also looking at creative ways to lock in pricing. Chris Gregory, executive vice president at SteelFab, recommended bundling orders across multiple projects to reduce cost volatility. “Package projects together. Say ‘It’s not just 1,000 tons we’re buying, we’d like 15,000 tons. What kind of deal can you structure for us to lock in price and help us with the schedule?’” he said. “That has saved a tremendous amount of money this first quarter that goes directly to the owners.”

Still, panelists acknowledged that many tariff-related cost increases don’t show up as clear line items on invoices. “A component costs $100 but because of tariffs, it now costs $150. My supply chain team quickly gets to work to try to find an alternate source. Let’s say they find a source that’s $125,” Cantando said. “You can argue that the $25 increase was a result of tariffs. But you’re not going to have a document that shows that because there’s no tariff that’s applied to it.”

Other supply-side challenges also loom. While U.S. steel mills are currently operating at around 75% capacity, certain segments are already seeing longer lead times. Andreasen warned that restarting aluminum smelting capacity, much of which has been idled in recent years, won’t be easy. “I do think it’s something that we’re going to have to watch pretty carefully,” she said. “I think that’s a challenge that we’ll continue to watch on the horizon.”

As a precaution, Skanska officials recommended that contractors and clients revisit project contracts to manage risk amid the uncertainty. “You might want to consider establishing unit pricing, or index-based pricing, for products where the supply chain is suggesting that firm fixed pricing won’t reflect future tariff policies,” said Sarah Vakili, senior director of business planning and strategy at Skanska. “Of course, stay informed and be willing to adapt.”

Originally reported by Sebastian Obando in Construction Dive.