Q1 2025
Construction Market Update

This quarterly spotlight provides an in-depth analysis of current trends, capital spend and industry outlook.

Three Takeaways

Tariffs on key construction materials will likely increase prices in the short term; the longer-term outlook is less certain.

There are signs a younger workforce is entering construction; however, replacing a retiring, experienced workforce remains a challenge.

Inflation eases slightly, but looming tariffs make Fed action uncertain.

J. Brett Williams

President
Construction

Jump to

Economic Outlook

Tariffs

Construction Labor

How Strategic, Proactive Project Planning Is Changing the Workforce Equation

The Two Topics Keeping You Up at Night

In this quarter’s Construction Market Update, we focus on two topics that I’m sure are top of mind for our customers: labor and tariffs.

It’s no secret that we have a construction labor shortage in our country. There is good news on the horizon. Our research shows that participation in apprenticeship programs is on the rise. And while an increase in apprenticeships may be helping on the “supply” side of labor, there is also the “demand” side to consider: How can jobsites evolve and what skill sets need to be employed to make the most of on-site labor? In this quarter’s update, we address this topic.

Tariffs are a subject many of our customers are asking about, and it’s a challenging topic to discuss because it is so fluid and fast-moving. Please read our take on how current proposals could affect the industry. This is a situation we are monitoring closely and informing our customers about as it changes. In the meantime, we find the Peterson Institute for International Economics to be a good source of up-to-date information about the tariffs.

Thanks for reading, and please stay safe.

Labor and Tariff Highlights

41.5

percentage of all U.S. imports from Canada, China and Mexico

$61B

annual U.S. imports of steel and aluminum

244K

active apprenticeships in construction

Economic Outlook

While the consumer price index (CPI) rose 3.0% in the year ending January 2025, inflation eased somewhat to 2.8% in February. Monthly numbers had been steadily trending upward since June.

Egg prices have garnered the most media attention — and have contributed to higher food prices — but the largest contributor to price increases continues to be housing. The Federal Reserve seems to be at an impasse. It doesn’t want to lower interest rates because of inflation, but inflation numbers are primarily driven by housing. Meanwhile, housing sales are slow (and prices high) in part because of high interest and mortgage rates. The result is that interest rates could decrease slightly or remain unchanged in 2025.

Tariffs

On March 4, President Trump increased tariffs on Chinese goods to 20% and imposed 25% tariffs on Mexican and Canadian imports (with a lower 10% rate for Canadian energy imports). Later that week, he granted a reprieve to automakers, then paused tariffs on imports that fall under the United States-Mexico-Canada Agreement (USMCA) until April 2. USMCA applies to around half of Mexico’s imports and 38% of Canada’s.

In 2024, Canada, Mexico and China accounted for over $1.35 trillion, or 41.5% of all U.S. imports. China and Canada have announced retaliatory tariffs.

Key construction imports from China include electrical and lighting equipment, HVAC equipment, appliances and hardware. From Mexico, the construction industry imports appliances, HVAC equipment, switchgear and steel, while Canada is a source of iron and steel, aluminum and wood products. Of these, the industry is particularly reliant on imports of aluminum, appliances, power tools, switchgear and hardware.

On March 12, Trump instituted 25% tariffs on steel and aluminum imports from all countries. The U.S. imports around $61 billion in steel and aluminum yearly, and both metals are important for construction.

Prices for steel have already increased ahead of the tariffs, though most steel used in the U.S. is produced domestically. Imports accounted for 23% of all steel used in the country last year. In 2018-2019, steel prices initially rose after tariffs were enacted, but prices fell as domestic production responded. The U.S. steel industry has additional production capacity, with raw steel production operating at 74% of capacity so far this year. Additionally, several new plants and expansions are set to come online in 2025.

The U.S is more reliant on imports for aluminum, primarily from Canada. S&P Global notes that a small supply surplus in 2025 leaves prices vulnerable to disruptions. Global aluminum prices are heavily impacted by China, which is the largest producer and consumer of the metal.

Reciprocal tariffs, which could apply to a wide range of countries and goods, are also planned for April 2.

Construction Labor

For years, the construction industry has worried about an aging workforce and potential labor shortages, calling for more workers to enter the field and touting the benefits of careers in the industry. There’s evidence that the message is being heard.

As an increasing number of Americans question if the cost of college is worth it, enrollments in apprenticeship programs and trade schools have increased and the construction workforce is younger.

Construction occupations had a median age of 41.1 in 2024, compared to 41.5 in 2015. While younger workers are entering the field, 20.3% of construction workers (including construction managers) in 2024 were 55 or older. Replacing these workers will be a challenge, but there are some positive signs coming from trade schools and apprenticeship programs.

Enrollment in construction degree programs (two-year programs) reached 85,175 in 2024, up 20.9% from 2023 and 43% higher than in 2019. More than half (43,141) of enrollments are in programs for electrical and power transmission installers.

Engineering enrollment (undergrad four-year) has also been increasing, up 5.5% to 635,594 students in 2024, which is more students than were enrolled in 2019. Apprenticeships in construction rose 10.6% in 2024, adding to an increase of 6.1% in 2023. There are nearly 244,400 active apprenticeships in construction. Electricians and line workers are the largest occupations, with more than 80,000 active apprenticeships.

Devon Claycamp

Materials Management Manager
Burns & McDonnell

Patrick Choudoir

Project Development Manager
AZCO

Building Smarter: How Strategic, Proactive Project Planning Is Changing the Construction Workforce Equation

The construction industry continues to problem-solve for recurring workforce and materials challenges, intimately focusing on how projects are planned and safely executed. Though studies show increasing interest and growing pipelines in the trades, the industry still faces an aging workforce and a projected shortage of nearly half a million workers in 2025. Companies must consider strategies for improving efficiency on the jobsite.

Largely, answers lie in solutions that have been around for years: materials management, modularization and technology. But today’s challenges demand a smarter, more integrated approach — a renewed perspective — that bridges engineering, procurement and construction to reduce inefficiencies and improve outcomes.

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Q1 2025
Construction Market Update