Proposed tariffs could impact the construction industry in various ways, as construction companies anticipate uncertainty regarding material prices. President-elect Donald Trump has vowed to implement tariffs on goods from the U.S.'s primary trade partners—Mexico, Canada, and China. Trump stated on social media that one of his first executive orders would impose a 25 percent tariff on products from Mexico and Canada, and an additional 10 percent on products from China. “On January 20th, as one of my many first Executive Orders, I will sign all necessary documents to charge Mexico and Canada a 25% Tariff on ALL products coming into the United States, and its ridiculous Open Borders,” Trump wrote on TruthSocial, adding that the tariffs were necessary to combat drugs and illegal immigration.

The U.S. imports more goods from Mexico, Canada, and China than any other countries, with U.S. Census data confirming their status as the top-three importers. Experts predict that the Trump administration’s swift implementation of tariffs could lead to price increases, creating uncertainty for construction contractors managing material costs. Anirban Basu, chief economist for the Associated Builders and Contractors of America, warned, “Heading into 2025 it’s unclear if prices will remain so well-behaved,” adding that tariffs could drive short-term price hikes as companies rush to import materials before the new policies take effect.

Ken Simonson, chief economist for the Associated General Contractors, noted that the construction industry is particularly reliant on imported materials and that the impact of tariffs could vary regionally depending on whether contractors use domestically sourced or imported materials. Reflecting on previous tariffs enacted by Trump, Simonson recalled that the 25 percent tariffs on steel and 10 percent on aluminum caused supply chain disruptions and price increases. He also warned of potential retaliatory tariffs from other countries. “Both the tariff-induced price increases and the responses are likely to be damaging to construction firms and to the demand for construction,” Simonson said.

Construction materials like Canadian softwood lumber, steel, concrete, and asphalt could see price hikes due to the proposed tariffs, with Mike Salsgiver, executive director of the Associated General Contractors Oregon-Columbia chapter, stating, “Anything that contributes to further increased price of materials is never a good thing for the industry or the public.”

While tariffs might benefit domestic producers, such as Timberlab in Oregon, some experts believe they could harm overall industry stability. Jordan Schnitzer, CEO of Schnitzer Properties, suggested that Trump’s tariff rhetoric might be a negotiation tactic rather than an actual policy shift, noting, “I think President Trump will use that as a threat and not enact the draconian tariffs he’s talked about.”

Josh Levy, a partner at Husch Blackwell law firm, highlighted the unpredictability tariffs would introduce, especially as the construction industry continues to rely heavily on imports. Levy expressed concerns that tariffs would increase material costs, especially following the volatility caused by the pandemic and geopolitical issues. “Now injecting policy to make that material likely more expensive is going to impact how jobs move forward,” Levy said.

Dan Wilson, an international trade and supply chain attorney, explained that the Trump administration is likely to target aluminum, steel, and softwood lumber, which could further disrupt the construction industry. “Tariffs are expected to home in on Chinese steel sources, and Canadian softwood lumber suppliers will likely face renewed challenges,” Wilson said.

The impact of tariffs on project financing is also a concern, as price fluctuations could delay or disrupt project funding. Contractors will need to be vigilant in tracking material prices and adjust their strategies accordingly, particularly as U.S. manufacturers compete with imports. Wilson cautioned that construction firms would need to diversify their supply chains to account for the potential disruptions caused by tariffs.

The new administration's emphasis on domestic production could lead to stricter preference rules favoring local suppliers. With potential changes to legislation like the Infrastructure Investment and Jobs Act, construction firms will need to stay agile as the policy landscape shifts under the incoming administration. "This incoming administration has done its homework,” Wilson said, “so, we might even see quicker action than was the case in the first administration when it comes to tariffs.”