Uncertainty within the Construction Industry due to Potential Trump Tarrifs

Widespread uncertainty within the construction industry has arisen due to President Donald Trump’s promise to impose tariffs. If implemented, new tariffs could mean price increases in construction materials, ranging from steel and iron to lumber, electronical components, and many others.

The first Trump Administration introduced Section 232 tariffs on all steel (25%) and aluminum (10%) imports and Section 301 tariffs targeting Chinese goods, covering a wide range of imports totaling approximately $370 billion. For context, Section 232 of the Trade Expansion Act of 1962 empowers the president to impose tariffs on certain goods if they threaten national security. Section 301 tariffs address unfair trade practices, such as intellectual property theft.

Regarding the second Trump Administration’s potential 2025 tariffs, some industry experts have reported that products imported from China, including lower-cost commodity items such as certain metals, coatings, plumbing components and HVAC parts, could see significant price increases.

While the industry braces for impact, some companies are implementing strategies to help ease their uncertainty. When possible, buying materials in advance and in bulk is a useful strategy to stay ahead of increased costs. Others are ensuring they have alternate sources for materials, emphasizing domestically sourced materials, which should be less vulnerable to tariffs. Others are looking at upcoming purchase orders and contracts, both upstream and downstream, and trying to negotiate terms that make sense for everyone in this uncertain market. For previously executed contracts, companies are reviewing the contractual provisions relating to tariffs, change in laws, and force majeure, to determine if they can pass along higher costs upstream should tariffs mean increased material costs.

Despite the consternation, others in the industry believe Trump’s tariff-related statements may be a bluff and are being used merely as a negotiating tactic with our international trading partners.

Jodie McDougal and Mike Currie are attorneys at Fredrikson & Byron, handling litigation and transactional matters for their construction-industry clients, including contractors, architects, engineers, owners, and others. If you have questions, contact Jodie at jmcdougal@fredlaw.com or Mike at mcurrie@fredlaw.com