Since President Donald Trump's election, contractors have been bracing for a trade war. The wait is over — the trade war has arrived, and its effects are already being felt throughout the construction sector.

On Tuesday, President Trump imposed a 25% tariff on goods coming from Mexico and most of Canada. In addition, a 10% tariff was placed on Chinese imports. This followed the administration’s earlier moves, such as the 10% tariff on Chinese imports imposed on February 4.

But the news doesn’t stop there. On March 12, Trump plans to roll out a 25% tariff on all steel and aluminum imports from around the globe, which will only add more cost pressure on construction companies already grappling with rising prices.

The impact of these tariffs has been noticeable long before they took effect. Prices for crucial construction materials surged in January as contractors hurried to stockpile supplies ahead of the new tariffs. With the tariffs now in place, contractors are finding themselves juggling escalating costs that are affecting project budgets, contract negotiations, and even the overall pace of construction activity.

"While some firms have found ways to mitigate risks through certain contract clauses, uncertainty remains high, particularly for projects with fixed-price contracts," says industry expert reports. This highlights the difficulty many firms are experiencing as they try to plan for projects under the shadow of rising tariffs.

In addition to the immediate effects on the construction sector, the tariffs have triggered a series of retaliatory actions from long-time trade partners. On Tuesday, Canada and Mexico quickly introduced their own tariffs in response to Trump’s measures, while China imposed additional fees of its own. This back-and-forth is fueling concerns that the global supply chain could face prolonged disruptions.

As one contractor put it, "The situation is now a juggling act. You’re trying to stay ahead of rising prices, but you’re also dealing with the added complexity of uncertain timelines and costs." This uncertainty, combined with the retaliatory tariffs from other countries, means that the construction industry may face even more hurdles in the near future.

Construction Dive delves into how the tariffs have evolved, what they mean for the construction industry, and how companies are adapting to the new trade climate. The analysis underscores the broader impact that these policy shifts could have on future construction activity and industry dynamics.

The Ripple Effect on Global Supply Chains

The ripple effect of these tariffs extends beyond just North American borders. Global supply chains are experiencing growing uncertainty, as companies attempt to adjust to shifting prices, changing trade relationships, and delays in material availability.

The rising tariffs on steel and aluminum, in particular, are expected to have a significant impact. "Steel is a fundamental part of construction, and with these tariffs in place, it's going to cost more to secure these materials, which means higher prices for everything from bridges to commercial buildings," one construction expert commented.

A major concern for contractors is the unpredictability of future trade policy. "We don't know if this is the beginning of a larger trade war or just a temporary situation," said a source familiar with the industry’s dynamics. "That uncertainty is making it much harder to plan long-term projects or commit to fixed-price contracts."

Strategies for Mitigating Risk

In response to these challenges, construction firms are exploring strategies to mitigate the risks. Some are turning to more flexible contract clauses, while others are seeking to negotiate better terms with suppliers. Some are even considering alternative sources for materials in an attempt to bypass tariff-induced price hikes.

"I think the companies that can adapt and stay agile will be in a better position to weather this storm," said a contractor based in the Midwest. "But for smaller firms without the ability to hedge their bets, this is a tough time."

Looking Ahead: More Uncertainty and Challenges

As the construction industry navigates these changes, there are still many unknowns. The future of trade relations, the long-term effects of these tariffs, and the response from other countries will likely continue to shape the construction landscape for months, if not years, to come.

The construction industry is clearly in a state of flux as these tariffs take hold. How firms will adapt to these new pressures will depend on their ability to navigate these challenges, whether through smarter contract negotiation, risk management strategies, or finding alternative sources for materials.

One thing is certain: the road ahead will be difficult for many in the construction business, but how they respond will determine their survival in an increasingly uncertain global trade environment.

Originally reported by Sebastian Obando in Construction Dive.