The year 2025 has brought a new level of uncertainty and financial pressure for contractors, builders, construction business owners, suppliers, etc. It shook the construction sector. With the emergence of new tariffs on construction materials, there is a mix of unease and anxiety for everyone affected.
If you are in the construction sector, you may start wondering, “What do these tariffs mean for construction projects? How does it impact your company’s bottom line?”
In this blog post, we will discover what is truly going on with tariffs in 2025 and how they impact construction materials and labor. We will also give practical tips on how you can thrive in this uncertainty and remain profitable.
The Impact of Tariffs on Construction
The latest batch of new tariffs has stunned many sectors, and construction is definitely affected big time. Most construction companies are under extreme pressure to complete projects due to the increasing cost of materials. The direct surge significantly impacts construction budgets, leaving project managers with reduced space to accommodate unforeseen cost overruns.
The costs of construction materials definitely have the biggest changes. You can expect higher costs today of the following materials:
- Concreate and Roofing supplies: Most cement and asphalt products heavily depend on imported raw materials. The price of concrete has reportedly increased to 13% due to increasing import costs and supply chain limitations.
- Steel and Aluminum: These materials are the two most essential to construction, from roofing to structural framing. The current 25% tariff on steel and 10% on aluminum have already led to price spikes. If tariffs keep expanding, the costs for these two materials may surge even higher.
- Lumber: 70% of softwood lumber being used in U.S. construction is directly imported from Canada, and current tariffs have already resulted in market instability. The prices of lumber have increased to over 35%, affecting both residential and commercial construction.
- Housing affordability: Import tariffs from countries such as China, Mexico, and Canada are expected to increase construction costs. This can potentially increase new home prices by 20%. The price increase totally affected home construction companies and resulted in many declines in the stock prices.
How Contractors Should Deal with Tariffs Challenges
We want to share with you the most practical and proactive strategies to protect your bottom line, especially in this very uncertain situation, with present tariff challenges and increasing construction costs.
- Cost-Plus contracts
During uncertain times and situations, cost-plus contracts (where clients agree to pay for the materials) can be a safer bet. It essentially builds trust and transparency, which is very important. When the client sees that lumber material has increased to 20%, he would realize that it is not you who set the high price but the market itself. In the end, you can still earn your agreed margin.
Most clients today prefer the honest approach rather than negotiating with a contractor who is unsure how to continue a project due to additional costs.
- Adjust the pricing models
If you currently offer fixed-price contracts in advance, you may consider reducing the validity window of your bids and adding escalation clauses. For instance, let’s just say other contractors require that the quoted price be valid for thirty days due to material costs. In other cases, they include a clause that locks the final price for key materials.
If you follow these moves, you can never be locked into a fixed price that may potentially become unprofitable, especially when tariffs drive up costs.
- Go for the other best alternatives
Become more creative with solutions to get easy with the blow of tariffs. You may use alternative construction materials or go with designs that utilize items that are less affected by tariffs. For example, if lumber and steel are quite expensive, some parts of the design may be switched to composite materials or engineered wood products.
- Schedule smartly
If your projects are lining up, always make sure to plan out your schedules. This makes helps you prioritize construction tasks that involve materials. Also, make sure to align your most labor-intensive tasks when you have a lot of crews available. Never stretch a limited workforce.
An intuitive scheduling software for construction crews can take your scheduling to the next level. Scheduling multiple tasks and monitoring people has never been that easy.
- Communicate and collaborate
You should not deal with everything alone. Ensure you communicate with your suppliers consistently. Your chosen suppliers always have the best information on price trends and may offer you bulk purchasing deals. Also, they have other options to offer you.
Additionally, communicate with your clients. They also know the news around tariffs and how it is affecting them. You can start by explaining the situation and proceed to frame a possible price increase. You can make clause additions to ensure projects are completed successfully.
Again, clients prefer honesty from the very beginning.
Leveraging Intuitive Technology is Key
Tariffs, labor shortages, and supply chain disruptions are not going away easily. In fact, the uncertainty of how long the tariffs will continue has been by far the most challenging in the industry. That is why construction businesses have to try their best to thrive in this period of financial pressure and uncertainty. If you fail to adapt, you will fall behind.
Embracing technology is certainly one of the best ways to stay ahead, especially in the face of present challenges. As a contractor, you are not only a hammer and nail type of guy; you are also a project manager and data exhauster, equipped with the best software in the market.
Are you prepared and equipped? If not, then this is where the Pro Crew Schedule kicks in.
Pro Crew Schedule is construction manpower scheduling software designed to make life easier and more productive for everyone in construction – especially amidst the ongoing tariff escalation.
With this software’s powerful inventory control features, you can track and manage all your materials, tools, and equipment. Cost tracking is seamless, too! You can easily identify any cost increase related to tariffs. Overall, it will better inform you of your material expenses and just overall management.
Investing in cutting-edge software will always be your best defense against any economic uncertainty.
