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.” Yet tariffs could be a boon to producers of domestically produced materials, such as Portland-based Timberlab, which is planning to build a mass-timber manufacturing facility in rural Millersburg, Oregon. “That is going to present renewed opportunity for local production, particularly around mass timber,” said Ezra Hammer, a Jordan Ramis land use attorney in Portland. Trump’s tariff talk may be only a negotiating position, said Jordan Schnitzer, CEO of Schnitzer Properties, a commercial developer and investment firm in Portland. “I think President Trump will use that as a threat and not enact the draconian tariffs he’s talked about,” Schnitzer said. Schnitzer said it makes sense to stand up to nations such as China that he said have committed widespread intellectual property theft. Intellectual property has long been a contentious issue in U.S.-China trade talks. “China has taken advantage of the United States by basically learning and stealing its technology and ramping up its production,” Schnitzer said. “You can’t blame them, but I think we’re just waking up now that we need to strengthen our manufacturing in this country.” Schnitzer said he was far more concerned by the prospect of an immigration crackdown than he was by tariffs. “If President Trump starts going into businesses and rounding people up who don’t have U.S. citizenships, you will see construction projects grind to a halt, you will see service businesses in massive trouble.” Tariffs could make project financing more unpredictable While American-made products are important for the industry, the construction economy still relies heavily on imports, said Josh Levy, a partner and co-leader of Husch Blackwell’s Construction and Design practice at the law firm’s Milwaukee office. Materials prices were starting to stabilize after the pandemic and war in Ukraine, but now contractors might have to watch for rising materials and project costs he added. “There’s concerns with how tariffs, if they are rolled out, raise the cost of materials for construction,” Levy said. “I think most people would prefer that the dollars get spent strengthening United States steel suppliers. The reality is that a construction economy relies on (imports), and we already saw a lot of price volatility in the past four years due to nonpartisan issues such as COVID-19 and war,” he added. “Now injecting policy to make that material likely more expensive is going to impact how jobs move forward,” Levy said, noting that if the next president moves forward with mass tariffs on foreign producers it will raise the cost of construction for projects. A developer raising money for a project has many plates spinning between different sources of funding, and all sources come together at a moment, Levy said. “And price fluctuation can disrupt putting the funding of a project together,” he added. Some projects might wait until the materials market stabilizes, Levy said. Others might purchase materials ahead of time and hold on to them when projects are ready to receive them. Contractors should keep their eyes on materials costs 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. “This incoming administration has done its homework,” Wilson said. “For the last four years they’ve really poured over the statute books and found as many levers to give the president as much authority to act as quickly as possible without much Congressional oversight. So, we might even see quicker action than was the case in the first administration when it comes to tariffs,” he added.