Tariff-related price pressures drove nonresidential construction input costs up 3.2% in 2025, outpacing broader construction cost growth and setting the stage for continued material price escalation this year, according to industry economists.
Overall construction input prices, which include residential building, rose 2.8% year over year, based on an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics Producer Price Index data. While December brought some short-term relief — with overall construction input prices falling 0.6% month over month and nonresidential costs down 0.7% — those declines were not enough to offset annual increases driven largely by trade policy.
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Materials most exposed to tariffs recorded the sharpest price gains. Copper wire and cable prices surged 22% year over year and are expected to continue rising into 2026 as escalation pressures persist.
“Key inputs are still experiencing rapid escalation,” said Anirban Basu, chief economist for Associated Builders and Contractors, adding that trade policy will “continue to put upward pressure on certain materials” this year.
Basu noted that construction materials less affected by tariffs, including asphalt and crushed stone, are expected to see relatively stable pricing in the near term. That stability reflects softer demand across much of the construction market outside of fast-growing segments like data center development.
Despite ongoing cost pressures, contractor sentiment remains relatively resilient. About seven in 10 ABC members expect profit margins to either remain steady or improve over the next two quarters, Basu said, suggesting firms are finding ways to manage rising input costs through pricing strategies or operational efficiencies.
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Other industry economists agree that tariff-driven cost increases are increasingly visible in construction data — and unlikely to fade anytime soon.
“Even though these indexes are based on selling prices of domestic producers, it is clear that the steep tariffs on imported metals and products are enabling U.S. sellers to push up costs for construction materials and equipment,” said Ken Simonson, chief economist for the Associated General Contractors of America. “Construction costs are sure to rise further in 2026 as long as the current tariffs remain in place.”
Aluminum prices posted some of the most dramatic increases. The producer price index for aluminum mill shapes jumped 30.5% between December 2024 and December 2025, marking the largest year-over-year increase since supply chain disruptions in early 2022. Simonson said the index has accelerated each month since President Donald Trump imposed a 50% tariff on aluminum last June.
Steel prices followed a similar trajectory. The index for steel mill products increased 17% over the course of 2025, the steepest annual rise since 2022, according to AGC data. Both aluminum and steel products are currently subject to 50% tariffs.
Higher material prices are also flowing through to construction equipment and machinery, further compounding cost challenges for contractors.
“Those higher prices are now showing up as well in the cost of construction equipment and machinery,” Simonson said. “That index rose 5.6% in the latest 12 months, the most in two years.”
Copper prices, another critical input for electrical and infrastructure projects, could climb even further if current trade policies remain unchanged.
Simonson added that copper costs will likely “go even higher this year if the tariffs stay in place.”
Originally reported by Sebastian Obando, Reporter in Construction Dive.
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