US tariffs: Impact on the US construction industry

Prices of building materials are expected to rise as a result of tariffs. While these increases have yet to be fully reflected in the data, increases are beginning to show and are expected to become more prevalent as the year progresses. Prices will also be affected by supply constraints that will arise as businesses look to other sources for materials; this rerouting of supply could impact not only price but also project timelines if there are delays in receiving the materials. On the other hand, project cancellations and postponements will weaken demand and could work to keep price effects lower than they otherwise would be.

Uncertainty is the main factor impacting the construction sector in the United States at this time. Tariff uncertainty will have a larger impact on the nonresidential structures segment as steel and aluminum are more widely used in these types of buildings, and while tariff concerns will impact the residential market it is uncertainty related to immigration policies that will play a larger role in this segment. As businesses begin to plan for future projects, the uncertainty surrounding costs will play a role in keeping investment sidelined until there is more stability and clarity surrounding tariff policy. With investment on hold, future projects and growth in construction spending will be most at risk.