A 25% tariff on almost all goods from Canada and Mexico, implemented by the Trump administration March 4, may lead to cost escalation for construction materials and increases in overall project costs, but the ultimate ramifications are unclear as the Trump administration continues to change the details and effective dates for its tariffs, with countermeasures changing in response.  

As of March 7, tariffs on USMCA goods have been paused until April 2. On March 11, Trump announced tariffs on steel and aluminum from Canada would be raised to 50%, in response to a 25% tariff issued by Ontario on electricity coming into the U.S. However, that plan was rescinded, as Ontario withdrew its tariff and agreed to reopen trade talks, and on March 12, the 25% tariff on all steel and aluminum imports went into effect.

In addition to the 25% tariffs imposed against the two neighboring countries, following a delay from the initial announcement in February—the administration is also increasing tariffs placed on goods from China to 20% from the additional 10% levied in February.

The newly announced tariffs will stack onto the 25% tariff on steel and aluminum imports first announced in February, and may cause prices to rise further. “While the U.S. manufactures a significant amount of the products that go into commercial construction projects, there is a dependence on imports. Estimates suggest that approximately one-third of materials used in U.S. construction projects are imported,” says Steve Southamer, executive vice president of project planning at Skanska USA Building.

He adds: “While we expect U.S. manufacturers will be able to increase production to meet a greater demand, we would expect that to also come at a cost and possibly create challenges meeting schedule requirements.”

Different Conditions From First Trump Administration

Construction input prices are still 40% higher than prior to the pandemic, according to the Bureau of Labor Statistics, “leaving little room for producers to absorb further increases,” says Sarah Martin, associate director of forecasting at Dodge Construction Network. “Unlike in 2018-19, when inflation was low and tariffs were more targeted towards specific imports—the tariffs enacted today could add more widespread risk to the construction sector.”

“With a blanket tariff on all imports from Canada and Mexico, cost increases will be widespread throughout the supply chain—notably on cement, lumber, copper, steel and aluminum,” says Martin. “The ultimate impact on the construction industry will depend on the duration of these tariffs and the retaliatory measures that are put in place.”

Mike Ireland, president and CEO of the Portland Cement Association, responded to the tariffs news in a press release March 4, saying, “The U.S. cement industry would like to work with the Administration to address federal laws and regulations that prevent American cement companies from increasing production, making it necessary for the U.S. to import some 20% of its total cement consumption annually—including from Canada and Mexico.”

Currently, roughly 27% of all cement imported by the U.S. comes from Canada and Mexico, comprising 7% of all cement used in the country. “U.S. cement manufacturers, who provide the materials for America’s vast infrastructure ... believe the right tax, regulatory and permitting environment will lead to more investments in U.S. cement production,” said Ireland.

*This story has been updated on March 7 and March 12. As this story continues to develop, we will provide updated information.