Implications for the construction industry

Donald Trump’s return has brought changes in economic and trade policies. New and reinforced tariffs contribute to rising material costs, particularly for steel and aluminum. As of March 12, 2025, a 25% tariff on all steel and aluminum imports was implemented, including those previously exempt from Mexico and Canada, as well as duty-free quotas from Brazil. This is expected to compound with the blanket Mexico and Canada tariffs enacted on April 2nd (Liberation Day), resulting in a 50% total tariff on steel and aluminum coming from Mexico or Canada. However, a 50% increase in material costs does not equate to a 50% rise in overall project costs, far from it. Factors like transportation and labor also play a significant role in the overall cost and these are unaffected by tariffs.

The U.S. currently sources 40% of its imported steel from Mexico and Canada and nearly half of its aluminum from Canada.¹ Although steel and iron prices declined by 11% year-over-year as of December 2024, the implementation of tariffs is already reversing this trend.

A 20% tariff on all Chinese imports is adding pressure to supply chains, prompting retaliatory tariffs from China and restricting Chinese exports of chips and critical metals essential for semiconductors and high-end manufacturing. With limited large-scale domestic production of these materials in the U.S., costs will likely rise. Key sectors, like data centers and manufacturing, already facing bottlenecks in electrical components, may face further delays.²

In addition, funding pauses for projects under the Infrastructure Investment & Jobs Act and the Inflation Reduction Act have introduced uncertainty for infrastructure and climate initiatives. The "Unleashing American Energy" executive order adjusts environmental regulations, accelerates permits for fossil fuel and nuclear projects, and prioritizes domestic energy production. These policy shifts may negatively affect clean energy investments, including EV manufacturing and renewable energy projects.³

Pre-existing legislation, such as the CHIPS Act, has driven tech manufacturing projects in semiconductors, batteries, and solar panels. However, Trump has proposed rolling back CHIPS Act funding, advocating for tariffs as a more effective means of encouraging semiconductor production in the U.S. This position could affect chipmakers like TSMC, which operates a chip fabrication plant in the U.S. and is building a second facility, supported by the CHIPS Act.⁴