Building Resilience in the Face of Trade Tariffs
20 February 2025
By Rachel Personius, Director at Currie & Brown
Our latest global cost predictions report emphasises that resilience is key in today’s construction landscape.
We live in a world of constant uncertainty and accelerating change. The report urges organisations to build resilience into their construction project pipelines, preparing for known risks like material price inflation and labour shortages, but also for the inevitable unforeseen shocks.
The proposed US trade tariffs are a prime example of this. We don’t know if or when the trade tariffs announced by President Trump will be fully imposed. But we recognise the huge value of having some degree of certainty about potential outcomes and consequences. What can the construction industry expect if these tariffs are imposed?
The impact on the US
In the US, unsurprisingly, prices will rise. Based on what we saw in 2018 when 25% tariffs were applied to steel, raw steel prices will rise initially and then stabilise. In 2018, this took around 15 months as domestic production ramped up. We can expect a similar trend this time as the top three US steel suppliers (Canada, Mexico, and Brazil) lose their exemptions and duty-free quota allowances. Steel and aluminium prices will likely rise by 20-30% in the next six months, plateauing in Q3. Prices will probably then level off 15-20% higher than baseline through the rest of 2025 before settling back to current levels in mid-2026. All of this assumes that domestic production once again kicks in to meet demand.
But a 20% rise in raw steel prices doesn't mean a 20% increase in project costs. Other factors like transport and labour significantly contribute to the overall price. In 2018, a 25% jump in raw steel prices translated to an increase of approximately 10% in fabricated and installed structural steel indices. The construction market priced in additional risk and uncertainty, leading to installed structural steel increases of up to 16% from 2018 to 2019.
While markets haven't fully priced in the potential impact of tariffs, we're already seeing some material prices, like steel and copper, begin to rise (+6% and +7.5% respectively) over the last 2-3 weeks.
If the tariffs go ahead, the impact will be felt across all sectors, but some will be hit harder than others. Residential construction, heavily reliant on lumber, could be particularly vulnerable if tariffs extend to Canadian lumber imports. While some projects, like data centers, may go ahead regardless, others with tighter budgets, such as hospitality or commercial real estate, might be put on hold.
Companies in the US with construction plans in the pipeline should act now. Budgets without built-in contingency are at risk. Consider purchasing steel and aluminium products now, before prices climb. For ongoing projects, locking in labour costs and offering employment stability could help offset rising material expenses. While outcomes are uncertain, being proactive is vital to mitigate the impact of these tariffs and other unforeseen challenges.
Advice for clients globally
Globally, we advise clients to be aware of potential scenarios, but not to panic. One risk is that material producers in tariff-hit countries might redirect their distribution away from the US. While this could increase supply elsewhere, it might undercut domestic producers and destabilise local supply chains.
These tariffs perfectly illustrate the need for resilience. We can't predict the exact outcome, but we can analyse potential scenarios and their impact. This allows us to develop mitigation strategies, protect projects and pipelines, and build a stronger future.