The implementation of 25% tariffs on steel and aluminum imports by the U.S. government, effective March 12, is expected to have far-reaching consequences beyond just import volumes. Industry experts predict that these tariffs could disrupt construction activities, leading to increased material costs and potential delays in various projects. Key sectors like commercial buildings, bridges, and residential homes are likely to be impacted, while demand-driven areas such as data centers and manufacturing facilities may remain relatively stable. The magnitude of this impact will depend on the size and scope of individual projects, with larger ventures facing more significant challenges. Overall, the tariffs are anticipated to increase construction costs, potentially reducing new project initiations and affecting supply chains.

Construction professionals are particularly concerned about how these tariffs will affect project timelines and budgets. Steel and aluminum are essential components in building materials, and any price increases will ripple through the industry. Scott Damiecki, a partner at CohnReznick, notes that higher material costs will drive up overall construction expenses, which can decrease demand. Larger projects, such as commercial and multifamily buildings, are more vulnerable to these changes, according to Brian Kassalen from Baker Tilly. Ron Ciotti, a construction attorney, warns that many new projects may no longer be financially viable due to supply chain disruptions and product shortages, causing developers to delay or cancel plans until there is greater confidence in material availability.

The financial implications of these tariffs are also a pressing concern. Julie Workman from Saul Ewing anticipates immediate effects, with prices rising rapidly over the coming months. For ongoing projects, contractors may have to absorb additional costs, cutting into their profit margins. Sam Giffin from Gordian highlights that the increased costs will likely be passed on to consumers or project owners through contractor bids. This scenario could lead to another surge in market prices for steel construction materials, similar to what happened when tariffs were first introduced in 2018. At that time, U.S. steel imports fell by 19%, and benchmark steel prices jumped by 14% in the first year.

In response to these challenges, contractors must carefully review contract terms to incorporate price escalation clauses for future projects. The construction industry will bear the brunt of tariff-related impacts, with downstream users of steel and aluminum, such as homebuilding and infrastructure projects, being disproportionately affected. As history has shown, the industry is likely to feel the cost impact almost immediately, leading to widespread adjustments in planning and execution strategies. The uncertainty surrounding supply chains and material availability will continue to influence decision-making processes within the sector.