Construction companies watching material prices should brace for uncertainty, according to experts, as president-elect Donald Trump vows tariffs on the country’s primary suppliers. On social media, Trump said one of his first executive orders will be to sign a 25% tariff on goods coming from Mexico and Canada, and an additional 10% tax on products from China. On the campaign trail Trump promised tariffs on imported goods and additional taxes on Chinese goods. 

“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 posted on TruthSocial. The president-elect added the moves were necessary to combat drugs and illegal immigration. “This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our County,” he added. 

The U.S. imports the most goods in the world from Mexico, Canada and China as its top three importers, U.S. Census data showed. Because of how quickly the Trump administration wants to enact tariffs and how tariffs might drive up costs, economists from the largest construction associations said contractors will likely face uncertainty when managing materials prices. 

“Heading into 2025 it’s unclear if prices will remain so well-behaved,” said Anirban Basu, chief economist of the Associated Builders and Contractors of America, in a statement. “The next administration’s trade policy increases uncertainty regarding construction materials costs. Beyond the implications of potential tariffs, input prices may rise in the short term if purchases rush to import materials prior to the implementation of those policies,” he added. 

“Construction is more reliant than most industries on imported materials, parts and components,” said Ken Simonson, the top economist for the Associated General Contractors. “Because the industry is so diverse and obtains materials mainly through intermediaries rather than importing directly, it’s impossible to estimate the share of construction purchases that go for imports. Also, it varies by location as to whether contractors are using domestically sourced or imported materials such as lumber, steel or cement,” he added. 

Simonson recalled when then-President Trump enacted 25% tariffs on steel and 10% on aluminum, which was followed by domestic producers raising prices and contractors experiencing supply chain problems. It’s not clear yet which items will be subject to tariffs and the effects, but another danger is the knock-on effects as other countries threaten to enact their own tariffs in retaliation, he added. “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. 

If carried out, additional tariffs could result in higher prices for a wide range of construction materials, from Canadian softwood lumber — key for homebuilding — to concrete, glass and steel used in large commercial buildings and asphalt binder used in roads. 

“Anything that contributes to further increased price of materials is never a good thing for the industry or the public, in our view,” said Mike Salsgiver, executive director of the Associated General Contractors Oregon-Columbia chapter. “Tariffs should be a tool of last resort,” Salsgiver said. “We would rather see the administration engage in full-throated trade negotiations.” 

Because uncertainty is a key feature with the Trump administration and trade policy, contractors will have to watch materials pricing closely in the early days, said Dan Wilson, an international trade and supply chain attorney at Husch Blackwell in Washington, D.C. 

On the raw materials side, aluminum and steel will be a “target” for the incoming administration, the former central to a federal case over dumped aluminum extrusions in the U.S., Wilson said. Tariffs are expected to home in on Chinese steel sources and previously loosened trade restrictions on European steel are expected to be in jeopardy as well, he added. 

Canadian softwood lumber suppliers fought hard to make progress as their products were subjected to raised tariffs in August, but that progress will likely be wiped, Wilson said. For materials further downstream, steel products in Mexico using inputs from China are on the table as well, he added. 

China supplied the most goods to the U.S. and made up 16.5% of total goods imports, according to the Office of the United States Trade Representative. In 2022, China supplied $536.3 billion worth of goods, Mexico supplied $454.8 billion and Canada supplied $436.6 billion in imported products. 

American manufacturers competing with imports will have benefits as purchasers seek alternatives, Wilson said. However, those who are physically further away from domestic producers will be most affected, he added. “One other issue I’ve seen in construction and other infrastructure projects is different ways to assign the risk of tariff liability as a contractual matter,” Wilson said, noting contractors will triage events such as tariffs in their contracts with clients to offset risk.  “You’re really going to have to look at diversifying supply chains with an emphasis on U.S. production,” he added. 

Acts such as the Infrastructure Investment and Jobs Act and the Inflation Reduction Act, which were signed by President Joe Biden with amendments preferring domestic suppliers, will likely be amended with tighter restrictions under the Trump administration, he added. Many of the preference rules are centered on steel, leading to more benefit for local steel manufacturers. 

After preparing for four years, the Trump administration will likely be poised to flex its powers quickly with little challenge, Wilson said. Construction firms will have to watch and act quickly, as well, he added. 

To find out more about the latest construction industry updates and innovations, meet with solution providers and hear talks from expert speakers, attend the Innovatrix Constructing Mega Facilities: Advances in Planning, Design and Engineering Summit taking place in Houston, Texas, USA on April 9-10, 2025. 

For more information, visit our website or email us at info@innovatrix.eu for the event agenda. 

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Finance & Commerce