How New Tariffs May Impact Construction Costs in 2025
- Apr 16, 2025
With the recently announced tariffs on foreign goods, many of our clients, trade partners, and suppliers are asking the same question: How will this impact our projects?
At The Beck Group, we monitor how these policy shifts could affect the construction industry. While uncertainty remains, one thing is clear: tariffs will drive costs higher in the short term, especially for materials heavily sourced from abroad.
Below, we outline what to expect and how to prepare.
How Much Will Tariffs Affect Construction Costs?
Beck estimates that tariffs could contribute 1.5 to 2.5 percent to construction costs in 2025. This is in addition to our previously forecasted 4.3 percent escalation for the year, bringing the potential total increase to between 5.8 and 6.8 percent.
Separating tariff-driven inflation from broader market trends will be challenging, but it’s essential for understanding what’s driving your project’s bottom line.
What Materials and Equipment Are Most Affected?
Tariffs will likely drive up prices for imported materials, including:
- Steel and aluminum
- Cement and crude oil
- Lumber and construction-grade wood products
- Appliances, tools, and equipment
Much of this is sourced from China, Mexico, and Canada. So far, China and Canada have imposed retaliatory tariffs on U.S. exports, adding more uncertainty.
What to Expect Across Project Phases
The impact of tariffs will vary depending on a project’s timeline:
- Projects already under construction may have little impact, especially if materials were purchased or pricing was locked in.
- Projects in early planning or preconstruction may experience delays or repricing as owners pause to reassess risk and wait for greater clarity.
How Long Will Tariffs Affect the Market?
We expect the heaviest impacts between now and Q3 2025, as higher input costs begin to affect bid pricing.
If the tariffs are rolled back quickly, pressure could ease by early 2026. However, if global trade tensions persist or escalate, volatility may continue into the next cycle.
Which Sectors Are Most—and Least—Impacted?
All sectors are expected to see higher costs, with some variation depending on the composition of the projects. However, construction activity in some sectors may prove more resilient than others:
Most Impacted (already interest rate–impacted):
- Office
- Hospitality
- Retail
Least Impacted (strong demand continues):
- Data Centers
- Healthcare
- Education
- Industrial
- Infrastructure
Strategies to Navigate Tariff-Driven Costs
Project teams are taking proactive steps to minimize risk:
- Contingencies: Have subcontractors bid projects without tariff impacts and develop a contingency strategy between the owner and general contractor to manage this risk. This avoids escalation on top of escalation.
- Alternative Materials: Work hard to develop alternative material selections that can be sourced from the U.S. and/or countries less affected by the tariffs.
- Secure materials early: Pre-purchasing can help lock in pricing.
- Review contracts: Ensure escalation clauses are clearly defined and balanced.
- Communicate early and often: Transparency helps teams align and adapt quickly.
How Beck Can Help
You rely on Beck to design and build your projects and to navigate complexity confidently. Whether we’re serving as architects, contractors, or both, we bring a collaborative mindset and real-time market insights to support informed, strategic decisions every step.
Let’s talk if you’re concerned about how tariffs could affect your project. Our teams can chart a path that balances cost control with project momentum.
Ben Bard is the Chief Operating Officer at The Beck Group. He leads the firm’s operational strategy, bringing expertise in construction delivery, market trends, and risk management. Ben plays a key role in guiding clients and teams through complex challenges while ensuring projects stay on track.