As President Trump begins his second term, the construction industry is poised to face significant changes with his administration’s new policies. Contractors and industry professionals must adapt their contracts and strategies to ensure they remain legally prepared for the evolving landscape. Below are key considerations to address:

1. Tariffs and Material Prices

One of the most immediate concerns is the potential for tariffs on materials. Although President Trump delayed his previous plans to implement tariffs, the February 1st deadline for imposing tariffs on China, Mexico, and Canada is fast approaching. This could lead to a significant rise in the cost of construction materials, especially as many components used in construction are sourced internationally.

Attorney Trent Cotney advises that contractors should include price escalation clauses in their contracts to protect themselves from these rising costs. “Make sure you have a price acceleration provision in your contract,” he said, “If these tariffs raise prices dramatically, you need to pass those costs on to your customers.”

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2. Labor Shortages and Immigration Policy

Another major concern is immigration policy. With a significant portion of the U.S. construction workforce being composed of immigrant labor, changes in immigration laws could exacerbate the labor shortage. Construction attorney Carol Sigmond highlights the importance of addressing potential labor shortages in contracts. She advises contractors to include provisions that account for labor disruptions due to changes in immigration policies.

“If there’s a labor shortage created by activities of Immigration, that’s a basis for a delay claim,” she said. “This would be a risk that goes to the owner.”

3. Increased Scrutiny on Waste, Fraud, and Abuse

With Trump’s focus on efficiency and reducing waste, fraud, and abuse, contractors working with federal agencies should be prepared for heightened oversight. This includes more stringent monitoring of federal projects, particularly in relation to the Infrastructure Investment and Jobs Act and the Inflation Reduction Act.

Frank Banda, an accountant specializing in government projects, suggests that contractors need to ensure their compliance programs are robust. “Expect increased focus on integrity monitoring and accountability,” he said. “There may also be a review of how federal funds are being used, and contractors should be prepared for audits.”

4. Changes to Federal Contracts and Grants

Trump’s administration is expected to make changes that could affect the legal standing of existing federal contracts and grants. Daniel Ramish, a partner at Haynes and Boone law firm, emphasizes that contractors should stay aware of new presidential directives and ensure that their contracts and compliance programs align with the updated regulations.

“In some cases, contracts or grants may be terminated if they are not aligned with the new administration’s priorities,” said Ramish. Contractors should regularly review their compliance programs and consult with legal counsel to avoid issues.

5. Cybersecurity and Domestic Preferences

Although the new administration will focus on efficiency, contractors must also maintain vigilance in areas of policy continuity, such as cybersecurity and domestic preference requirements. Compliance with these long-standing policies is critical for avoiding legal pitfalls.

As the political and policy landscape shifts, construction companies need to stay proactive. It’s crucial to assess existing contracts and agreements, adjust for new tariffs, immigration impacts, and policy changes, and ensure they are fully aligned with the new administration’s priorities. By doing so, contractors will not only protect their legal standing but also position themselves for continued success in the changing market.