Tariffs and the Construction and Design Industry

Tariffs on imported materials like steel, aluminum, and lumber directly translate to higher prices for these goods. These costs are then likely to be passed down the supply chain, impacting all parties involved. 

Tariffs can disrupt international trade and supply chains, leading to potential delays in material deliveries. This can cause project delays and increase costs associated with labor and equipment rentals. 

The increased cost of materials due to tariffs can make it difficult for developers to stay within project budgets, potentially leading to project delays or cancellations. Lenders may also adjust their underwriting models in response to these increased costs, requiring more liquidity upfront. 

Design teams may need to reassess designs and specifications to find alternative materials or suppliers, potentially affecting the overall design vision. 

Some experts suggest that reshoring (bringing production back to the U.S.) could exacerbate labor shortages in the construction industry. 

The increased cost of building materials can also impact the housing market, potentially leading to higher home prices and reduced affordability for consumers. 

Tariffs may raise questions about contract interpretation, particularly regarding “force majeure” or “supervening event” clauses. 

Design teams and builders can explore domestic alternatives or suppliers that are not subject to tariffs. 

Reassessing design specifications to identify non-critical elements where substitutions could reduce costs. 

Include tariff adjustment clauses in construction contracts to protect against unexpected price increases due to tariffs.