J. Brett Williams
President
Construction
From Uncertainty to Action: What Owners Need Now
I’ve been in this industry for more than 30 years, and I’ve rarely seen times like these. The construction industry is poised for growth yet held back by mounting uncertainty. Tariffs, fluctuating material costs and unpredictable global markets are impacting everything from procurement to project timelines.
We’re adapting, but every decision carries more weight than ever.
At a volatile time like this, our customers may be wondering what they need to know before they begin their next construction project. In this issue, Holly Streeter-Schaefer, Kelly Jeffcote and Courtney Dunbar dig into this topic in a big way. Addressing issues from contracts, risk and sourcing strategy to site planning, it’s a must-read for anyone preparing to break ground. This practical, timely information will help customers make better decisions — and help construction and design partners serve them more effectively.
This rapidly changing landscape demands that we share knowledge and listen to one another. That’s why we’ve included a short survey in this update. We’re asking for your input — not just to get a pulse on how others are navigating tariffs, delays and construction innovation but also to better understand where we are headed as an industry.
Your feedback will help us all. By contributing to this survey, you will paint a clearer picture of the state of construction and allow us to serve you better across regions and sectors.
Thank you for being a part of this industry — and part of the conversation.
Live Safer.
Tariffs
Uncertainty may turn out to be the operative word of 2025. Executives cited uncertainty in 87% of recent earnings calls, driven by over a dozen major tariff changes since Feb. 1. The U.S Economic Policy Uncertainty Index hit 725 in April, compared to a peak of 504 during the early months of COVID-19.
For many businesses, the agreement between the U.S. and China to temporarily reduce tariffs is welcome news. As the two countries negotiate a new trade agreement, the U.S. has reduced the reciprocal rate on Chinese goods from 145% to 30%, and China has reduced its retaliatory tariff rate from 125% to 10% (some goods have higher rates from previously enacted tariffs).
But even with the reductions, tariffs remain substantially higher than they were five months ago. In addition to the 30% reciprocal rate for China, other tariffs currently in place include:
- 10% on imports from all countries (with some exclusions).
- 50% on steel and aluminum.
- 25% on cars and light trucks.
- 25% on goods from Mexico and Canada not covered under the States-Mexico-Canada Agreement (USMCA), which applies to around half of Mexico’s imports and 38% of Canada’s imports. Canada has matched the 25% rate on non-USMCA goods.
Uncertainty isn’t going anywhere as several tariff pauses have deadlines coming this summer, and the Trump Administration has promised additional tariffs. Some items to keep in mind:
- Reciprocal tariffs on many countries were paused until July 8. The U.S. and U.K. have announced the intent to sign a new trade deal, representing the only adjustment to rates announced in April besides those imposed on China.
- A July 9 deadline was set for negotiations with the European Union to avoid a 50% tariff rate from the U.S.
- Negotiations for a new U.S.-China agreement have a deadline of Aug. 10.
- In late May, two federal courts ruled that President Trump did not have the authority to impose tariffs based on emergency declarations. Those rulings have been paused during appeals.
- Steel, aluminum and auto tariffs were imposed under a different authority that gives the president the power to impose tariffs if the Commerce Department finds those imports threaten or impair national security. Commerce has announced investigations into lumber, copper, critical minerals, semiconductors, trucks and pharmaceuticals.
Economic Impact
Even prior to the reciprocal tariffs announcement in April, tariffs already had started to affect business and consumer spending patterns. In Q1 2025, the U.S. trade deficit reached a record high as businesses rushed to purchase goods ahead of the tariffs. Overall imports were up 11%, with major increases in pharmaceutical and computer imports, up 60% and 50% respectively.
Despite what many news articles have stated, imports do not subtract from gross domestic product (GDP), which measures the goods produced within the country. While imports do not directly reduce GDP, they can affect it indirectly. GDP will be lower if businesses reduce other investments so that they can stock up on inventories, which may have been the case in Q1.
Construction Prices
Overall, inputs to nonresidential construction rose 2.5% from December 2024 to April 2025, possibly driven by advanced buying. Prices for steel mill products rose more than 14% during that period, with prices for copper up 5%. Spot prices for copper and steel have come down slightly over the past few weeks. Steel and lumber remain far below levels seen in 2021 and 2022, while copper sits near all-time highs.
Tariffs will impact some construction inputs and markets more than others. Commodity prices are a larger percentage of the overall cost for standardized components common in commercial, water/sewer, bridges and highway projects.
For more specialized or custom components (like power transformers or pressure vessels), the underlying commodities make up a smaller relative share of the overall cost because of sizeable design, fabrication and testing costs. Tariffs will have less of a direct effect on domestically assembled custom equipment common in heavy industrial, power generation, oil and gas, and manufacturing projects.
After the supply chain disruption of COVID-19, more suppliers began pricing dynamically based on spot prices. That trend has continued amid tariffs, with suppliers increasingly using daily spot prices or including escalation clauses rather than quoting firm prices. Suppliers also have been less willing to accept DDP (delivery duty paid) freight terms, where they are responsible for paying import duties, taxes and fees.
Construction Spending
Total nonresidential construction spending has been stable over the past year, with a slight decline over the last three months. Here’s a deeper look into individual sectors (figures shown are annual rates, adjusted for inflation):
- Since the start of 2023, data center construction has been the strongest performer, with 132% growth.
- In that time, chemical manufacturing (including pharmaceuticals) is up 27% and power is up 17%.
- Computer, electronic and electrical manufacturing (including battery and solar panel facilities) had a meteoric rise, from $10 billion in January 2021 to $138 billion in May 2024. Since then, it moved downward but remains over $120 billion.
- Infrastructure spending (water, sewer, highway/streets) grew 22% in 2023 but has plateaued since.
- Warehousing has fallen 28% since its peak in April 2023 but has been stable for the past six months.
- There’s no bottom yet for the office market, which is now down to $49 billion, compared to $101 billion before COVID-19.
Construct Connect reports that construction starts were slow in January and February but picked up in March and April. Year to date, starts are down 0.5% from 2024. The strongest growth has been in data centers, airports, power and bridges.
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Source: U.S. Census Bureau, annualized rate, adjusted for inflation