In May, the construction backlog dropped to 8.4 months due to delays and cancellations caused by tariffs, as reported by an Associated Builders and Contractors (ABC) survey on June 10. This decline follows a two-year high and reflects slowing momentum in various sectors such as infrastructure, commercial, and institutional work. While heavy industrial projects showed gains and the Northeast region experienced year-over-year growth, the broader industry is feeling the pinch of tariff impacts.

According to ABC's chief economist, Anirban Basu, nearly 25% of contractors reported project cancellations linked to tariffs during May. As the industry anticipates further delays, concerns about material costs are mounting. Approximately 87% of contractors have received notices regarding price increases tied to tariffs. Despite these challenges, confidence in profit margins improved slightly in May, though this may be fleeting given the recent escalation in steel and aluminum tariffs to 50%, announced earlier in June.

The increase in tariffs is expected to significantly impact project budgets across numerous commercial building initiatives. During a recent construction industry webinar, experts highlighted how rising tariffs could strain financial resources for ongoing and upcoming projects. The ABC survey also noted a dip in sales and staffing confidence, indicating growing unease among contractors.

Despite these obstacles, optimism persists within the construction sector. Around 60% of contractors expect their sales to grow over the next two quarters, suggesting resilience amid economic uncertainties. Basu emphasized that while challenges loom large, builders still foresee positive momentum heading into the latter half of the year.

As tariffs continue to reshape the construction landscape, stakeholders must navigate increased costs and potential delays. Although current projections indicate some level of sustained activity, the long-term effects of these trade measures remain uncertain, requiring vigilance and adaptability from all involved parties.