New rates that are at risk of future construction projects

Commercial construction project owners and developers may hesitate to move forward with new works after President Donald Trump collected new rates in more than 180 countries, according to industry sources.

Trump on Wednesday announced a 10% reference fee for all US commercial members with additional reciprocal rates for select nations, such as another 34% to Chinese imports and 20% to imports from the European Union.

There will be many key construction materials, such as steel, aluminum, wood and copper exempt from these reciprocal ratesAccording to a white house launch. But steel and aluminum importers have paid 25% of rates in these materials Since March 12, while Canadian Importers of soft wood 14.5% of anti-abocement rate and anti-subsidiaAccording to the National Association of Housing Builders. This has been pressing up the costs, said Anirban Basu, an economist in chief of builders and associated contractors.

“Material prices are likely to increase in the coming months,” said Basu. “In the non -residential part, monitor the prices of steel and iron products, as well as aluminum. Mostly, steel domestic prices have already increased significantly.”

Price increases are expected, but time will take time to work on the system. Contractors usually cause products such as concrete, plaster and other raw materials nationwide, so they are less likely to be affected, said Tim Jed, a supply chain leader at the DPR Construction.

“However, even if the products occur nationally, rates could affect domestic prices or lead times,” said Jed. “Ultimately, what is important is, where we buy and where these materials are imported, but it is not an easy information to get there.”

Future expense at risk

The prices of non -residential materials jumped to Annualized rate of 9% During the first two months of 2025, the builders rushed to gather materials. According to the ABC, general construction inputs are 41% higher in February 2020.

This costs leap mixed with uncertainty on how markets will react to the new trade policy will begin to curb construction investment activity, said Jeannine Cataldi, an associate director of global construction at S & P Global Market Intelligence. This will have an impact on non -residential construction, specifically private funding projects.

“Most of the construction activity will show these effects delayed, as projects have already begun to a large extent,” said Cataldi. “Future spending is more at risk.”

Non -residential construction expenditure reached 1.26 trillion dollars in February highest level of recordAccording to an ABC analysis of data from the US Census Office published on Tuesday. However, public construction projects took into account this impulse, and even this can begin to fade -said Cataldi.

“The infrastructure will be affected if the funding is remembered, this is currently pending, if the increase in the prices of the materials affect the budgets and the labor force is restricted by immigration policies,” said Catali.

Work problems

Together with prices, economists monitor the recruitment rate. If reciprocal rates contribute to the layoffs of construction and if companies do not expand their levels of staff, it will be difficult for the economy to maintain growth, Basu said.

Thus, although contractors have escaped with additional rates on steel, aluminum and copper, labor problems caused by Trump’s policies could be put into activity, Michael Guckes, chief economist in Cincinnati, said.

“We are very concerned about the construction labor market,” said Guckes. “With the real possibility of contraction at work due to the most authoritative deportations of unauthorized workers, we could see that the greatest concern of the costs for the industry in 2025 does not come from materials but from labor.”

The way the market moves after what Trump calls its liberation day rates should provide a strong indication of how companies will approach the new commercial environment, said Basu.

For the contractors of the data center and the manufacture, for example, the activity will be high regardless of the fares, said Basu. Construction companies can also expect a substantial additional expense on road and railway projects, and possibly broadband internet construction in poorly connected areas, said Ken Simonson, an economist in none of the General Associated General Contractors of America.

However, the rates represent multiple threats for the general construction activity, including these sectors with strong impetus, said Simonson. Basu added prices for copper, a key material in the construction of the data center, they have jumped significantly to start by 2025.

“Copper prices have recently raised, they have exploded the other way around,” Basu said during a webinar of ABC’s economic perspectives on April 2. “The data centers use a ton of copper. There are some serious problems that arise due to these rates.”

Cancellations ahead?

The Trump administration is using rates as a tool to level the pitch with the main business partners, said Basu. He says that while economists often see rates as bad news, a strategic movement to push other countries to reduce their own commercial barriers could be beneficial if it works.

“This can be a mechanism to reduce the rates really against North -American exports,” said Basu. “If this is the final game here, to use these reciprocal rates to do it, to move away and leave -fall into the rates against our exports, as an economist, of course I love.”

Trump said on Wednesday that companies can avoid rates by making their products in the United States, although there may be some examples of companies that open or expand manufacturing facilities in the United States as a result of rates, they are likely to exceed the value of canceled projects, Simonson said.

Rates are expensive for contractors who have committed to a project A Fixed or guaranteed maximum price contract And they have not closed the price of the materials. If contractors increase prices to take into account rates, some owners may cancel, postpone or climb nearby projects, Simonson said.

“But the greatest threat is from higher producers and logistics companies or lose sales of export, as foreign governments and consumers increase the non -united states of non -U.S. “These companies and their employees will reduce their spending, including construction.”

The sudden implementation, with the rates in force immediately, could cause discomfort to certain economic actors, said Basu. He said that there is usually a buffer between when a policy is announced and when it comes into force.

“Think long and hard on the cash flow and do not keep unnecessary costs for too long,” said Basu. “In other words, contractors should focus on retaining cash.”

Jed added that there is no single approach. Just buy products and materials now to block the best price may not be the right strategy.

“We let our teams work with the tools we have created internally to strategically look at a project that makes the most sense,” said Jed. “Don’t react excessively.”