Navigating the 2025 Tariffs

Written By IIDA New England Communications Committee
 
 

Navigating the 2025 Tariffs
Impact on U.S. Construction Costs, Supply Chains, and Mitigation Strategies

At the start of 2025, new tariff measures were introduced to reshape U.S. trade policy by reducing reliance on imports and promoting domestic manufacturing. Targeting key trade partners like China, Mexico, and Canada, these broad tariffs cover raw materials, manufactured goods, and construction-related commodities. These policies seek to boost domestic job creation and industry growth by making U.S. products more competitive, encouraging businesses to source locally, and reducing economic dependence on imports. Although policy effective dates remain unpredictable, their potential effects are already influencing domestic markets.

Similar to trade policies enacted in 2018, these tariffs could introduce new material costs, project schedule delays, and supply chain disruption, affecting ongoing and future construction projects across the U.S. market. The immediate impact on overall construction costs is projected to be moderate, with an estimated increase of 3-5% due to labor and fabrication costs making up 40-60% of project expenses. However, longer-term impacts may appear as costs rise for industrial equipment, electronics, and energy supplies.

 
 

What are tariffs and how do they work?
Tariffs are a tax on imported goods, paid by the importing company. This applies to both finished products and component parts used in domestic manufacturing. For instance, if a U.S.- based company designs lighting fixtures that are then manufactured in China, the U.S. company must pay an extra 10% tax to the federal government each time it imports the products into the United States. The same applies to parts and materials. If a U.S. manufacturer produces goods locally but imports components — such as springs for sofa cushions — it is required to pay tariffs.

What materials may be affected?
Key construction materials like aluminum, steel, lumber, and cement — critical for structural integrity, framing, and finishing are expected to become more expensive due to their dependence on imports from Canada, Mexico, and China. Other raw materials, including plastic and copper along with M/E/P equipment and electrical components used in the building industry, will also be subject to tariff rates based on their country of origin. While many of these materials are produced domestically, the industry remains highly susceptible to cost increases driven by tariffs. As import prices rise, domestic suppliers often respond by increasing their own prices due to higher demand and reduced competition.

Aluminum & Glass
The U.S. imports 44% of aluminum and glass facades, which regularly comprise 10% of a project’s budget. Aluminum used for curtain walls, roofing, cladding & facades, and window & door frames is primarily sourced from Canada, with additional resources supplied by China and Mexico, and will now be subject to 25% tariffs.

Structural Steel
Just over a quarter of steel, essential for structural components like rebar, steel studs, and steel pipes, is imported to the U.S. and will be subject to a 25% tariff. A significant portion of U.S. construction projects rely on structural steel produced in Canada, which supplies 23% of all import shares.

Lumber
Twenty-five percent of lumber and heavy timber used in the construction industry is imported, with the largest share of 41% supplied by Canada. Tariffs may influence the cost increases for low-rise wood-framed, multi-family projects along with framing, millwork, doors, and wood flooring.

Can the impact of tariffs be mitigated?
While the full impact of tariffs remains uncertain, historical precedent suggests that price fluctuations and schedule disruptions are likely in the near term. As manufacturers and suppliers begin to raise prices in anticipation of full tariff implementation, some in the construction industry are taking proactive measures to mitigate the effects on current and future construction projects. These include pre-purchasing materials, diversifying sourcing across different countries, exploring domestic sourcing options, identifying alternative suppliers, and strengthening collaboration with industry partners. In an increasingly uncertain landscape, adopting a proactive strategy can help reduce disruptions and ensure cost and schedule stability.

Interested in reading more about the history of tariffs? Check out the wikipedia entry on the History of Tariffs in the United States.

Designer Monologues the Podcast from IIDA New England with your host Katie Corcoran Garcia is officially LIVE! On this show, we share the stories behind the design of repurposing, developing, and reshaping our communities. Incubated from the minds and skills of New England’s talented design community, you’ll hear how visual inspiration can come from nature, our history, current trends, and more as we take you on a story-telling journey behind design. 

Check out all of the episodes here! 

Stay tuned for the next President's Message!

 
 

Be sure to check in with the IIDA New England calendar for upcoming events offered in our community. Here's a sneak peek at some upcoming events:

Check out the list of IIDA New England Emerging Leaders Network (ELN) Class of 2023 and the Leadership Exploration & Development (LEAD) Class of 2023!

Do you have an idea that you would like to share with the design community or see highlighted here in The Wire? Share your ideas here. 

 
 

Stay tuned for the next Sponsor Spotlight!

Follow IIDA New England on social media and visit our website to keep up with the latest and greatest!

IIDA New England Communications Committee
Next

Greenwashing