WASHINGTON, D.C. — Five months after President Donald Trump declared April 2 “Liberation Day” and ushered in a sweeping wave of import tariffs, construction companies are still grappling with the fallout. Steel, aluminum, copper and other essential building materials now carry steep duties, sending costs soaring and slowing construction spending across the country.

Though a recent appeals court ruling has overturned some measures, tariffs on steel, aluminum and copper remain firmly in place. Their impact has gone beyond politics—affecting projects already underway, those still in planning, and even reshaping conversations about the long-term health of U.S. construction and manufacturing.

Industry leaders are divided on whether tariffs will ultimately help or hinder the sector. Some executives see them as a necessary step to rebuild domestic manufacturing and strengthen resilience. Others fear they will only drive up costs and discourage investment.

“The real debate for construction executives in 2025’s second half is not whether tariffs are good or bad,” said Jay Bowman, partner at Raleigh, North Carolina-based consulting firm FMI. “It’s whether there’s a balance point where tariffs, while adding costs in the short term, can ultimately deliver long-term resilience for domestic builders and reverse the decline of manufacturing in the U.S. Think of the negative aspects of 90 years of potentially low tariffs, the loss of domestic manufacturing and with that, the removal of vocational education in our schools. The major challenge that has really impacted the design and construction industry over the last 50 years has been a shortage of skilled labor.”

The Balancing Act

Bowman argues tariffs must be steady and predictable to work. Too low, and the U.S. stays vulnerable to global shocks. Too high, and construction costs spiral, freezing projects.

That view is echoed by Michael O’Reilly, vice president at Rider Levett Bucknall: “Tariffs can play a part in reshoring and boosting domestic manufacturing, but it depends on long-term consistency to be effective.”

But others are skeptical. Ken Simonson, chief economist at the Associated General Contractors of America, said tariffs are unlikely to restore U.S. manufacturing dominance:
“U.S. manufacturing shrank mainly because European and Asian countries had lower labor costs and, in some cases, better access to raw or processed materials. Low tariffs were a minor contributor and high tariffs will not be sufficient to bring back much manufacturing now, especially if firms can’t count on the tariffs lasting, access to inputs or sufficient skilled labor.”

Labor Shortages and Education Gaps

Beyond material costs, workforce shortages complicate the tariff equation. Michael Guckes, chief economist at ConstructConnect, noted that even if domestic production grows, there may not be enough skilled workers to meet demand.

“Low tariffs did not hollow out America’s domestic manufacturing as much as they slowed the pace of its decline,” Guckes said. “Additionally, we cannot ignore the fact that today’s vocational training pipeline is as small as it is because too many young people were pushed into college programs.”

He also warned that tariffs are fragile since they rely on executive action: “Today’s tariffs are a result of executive branch efforts, which, without codification into law by Congress, could be quickly nullified by the next presidential administration as soon as 2029. This reality leaves a cloud over profitable domestic production investments which could quickly turn into failed ventures without long-term tariff support.”

Global Shifts and Policy Lessons

Some economists argue that U.S. deindustrialization was inevitable. Anirban Basu, chief economist at Associated Builders and Contractors, said the post–World War II boom was unique:
“Significant loss in U.S. manufacturing capacity over the course of decades was inevitable, with or without tariffs. As more nations industrialized, including China, India, South Korea, Brazil, Mexico and many others, more nations were able to supply themselves. It is conceivable that harsh regulations, unionization and poor management also played a part in accelerating the deindustrialization of America.”

Still, Basu believes tariffs could be used strategically: “Perhaps these high tariffs serve as a means to induce other nations to lower their barriers against U.S. exports. If our barriers and their barriers to trade collapse while America makes the right investments, there will be substantial augmentation of U.S. manufacturing.”

He also noted: “The higher the tariff, the greater the loss of efficiency. America prospered when tariffs were low. Perhaps the optimal outcome would be targeted tariffs in areas deemed central to national security, but low tariffs on virtually all other goods.”

Simonson countered: “Measures that raise costs, such as tariffs, quotas and unnecessarily strict regulations, are net losers for the economy. Protected firms may expand capacity but usually raise prices and work to keep barriers in place. Far more businesses and consumers pay more or are left with less desirable choices than win from more profits and jobs.”

How Contractors Are Adapting

Despite uncertainty, contractors are adjusting. Market reports from Skanska, DPR, and Gilbane show firms shifting sourcing strategies, embracing early procurement packages, and even stockpiling smaller goods to hedge against volatility.

Still, Gilbane projected just 1% growth in 2025 construction spending—down sharply from 6.5% in 2024.

“Data centers are probably best able to adapt to tariff costs,” Simonson said. “The cost of tariffs is trivial compared to the revenue a new center can generate.”

Large-scale infrastructure, healthcare, and education projects may also weather the storm, while private office and multifamily developments face more risk of stalling.

The Road Ahead

Ultimately, construction leaders agree on two points: tariffs increase costs in the short term, and their long-term effectiveness hinges on policy stability. Whether they lead to stronger U.S. manufacturing or simply higher building expenses remains an open question.

Originally reported by Sebastian Obando in Construction Dive