The numbers are no longer theoretical. Input prices for nonresidential construction surged at a 12.6% annualized rate during the first two months of 2026 — the fastest pace since the supply-chain disruptions of early 2022 — and the materials driving those increases share a common cause: federal tariff policy that has now reached levels few in the industry anticipated just eighteen months ago.
.jpg)
The Associated General Contractors of America updated its Tariff Resource Center on April 2, 2026, publishing what it called the most comprehensive snapshot yet of how tariff rates are hitting the field. The figures are striking. Steel, aluminum, and copper items made entirely or mostly from those metals now carry a 50% tariff. Derivatives containing those metals carry 25%. Industrial and electrical equipment that incorporates those materials — transformers, panel boards, conduit systems — face a 15% tariff. Even products manufactured abroad using entirely American-sourced metal carry a 10% duty.
"The steep tariffs on imported metals and products are clearly enabling U.S. manufacturers to raise their selling prices." — Ken Simonson, Chief Economist, AGC of America
The producer price index for aluminum mill shapes jumped 33.0% year-over-year through January 2026 — the largest single-year move since the pandemic disruptions of early 2022. Steel mill products rose 20.7% over the same period. Copper and brass mill shapes climbed 15.7%.
For projects with significant structural steel or MEP scope — data centers, healthcare facilities, manufacturing plants, and airport terminals — that translates directly to estimates that can no longer be trusted if they were written before mid-2025. One analysis estimated aggregate construction cost escalation at roughly 8% under current policy conditions, with tariff-exposed trades running well above that band. Longer-term impacts on specific material types are expected to range from 5% to 25% depending on category.
Residential projects face their own version of the crisis. The Brookings Institution calculated that current tariffs will add roughly $30 billion to the cost of investment in residential structures — approximately $17,500 per new home — a figure that could result in 450,000 fewer homes constructed through 2030, according to the Center for American Progress.
Softwood lumber carries a 10% tariff; derivatives carry 25%. As of early 2026, framing lumber sits around $872 per thousand board feet — down slightly from late last year but up nearly 13% year-over-year. A historic wildfire season in 2025 reduced Canadian timber yields, and anti-dumping duties on Canadian imports compound the supply tightness. Any near-term rate cuts from the Federal Reserve could release pent-up housing demand that collides with that constrained supply.
The AGC's guidance is direct: update your contracts before signing anything new. The association has published a Tariff Memo for contractors on federal and federal-aid projects, and is actively promoting the ConsensusDocs 200.1 Material Price Escalation Amendment — a contract rider that gives owners and contractors a structured mechanism for sharing tariff-driven cost increases mid-project rather than litigating them afterward.
.jpg)
Two in five firms have already raised their own prices in response to tariffs. Another 16% absorbed the costs or negotiated with suppliers. Nearly 40% expect materials costs to climb further.
Originally reported by AGC.
.png)
