“I expect tariffs will put upward pressure on the cost of construction materials over the next several months,” said Kenneth Simonson, AGC chief economist. “The impacts have been limited so far because of stockpiling and delayed effective dates for many tariffs, as well as softening demand for projects,” he said.

Demand has softened, Simonson said, in part because of tariffs themselves, and also uncertainty about what would be covered, when, and for how long.

The AGC-NCCER analysis found that 43% of contractors reported at least one project in the past six months had been canceled, postponed or scaled back because of higher costs.

The producer price index for aluminum mill shapes increased 5.5% last month and 22.8% from August 2024. The index for steel mill products rose 1.5% in August and 13.1% over 12 months. The index for lumber and plywood increased .5% for the month and 4.8% year-over-year.

AGC said two in five construction companies reported raising their own prices in response to tariffs, and many accelerated purchases to get ahead of further hikes.

Another 16% said they had absorbed higher costs themselves or worked with suppliers to share the burden. Nearly 40% of contractors said they expect materials costs to climb further in the months ahead.

Absorbing the Impact

An analysis of the same data by the Associated Builders and Contractors noted that the price increases would have been worse if contractors had not been able to take advantage of lower prices for fuel.

“Construction materials prices rose modestly in August, although the increase would have been larger if not for declining oil and natural gas prices,” said ABC Chief Economist Anirban Basu. “Prices rose at an especially rapid pace in some categories most affected by tariffs.” He said iron and steel prices, are up 9.2% year-over-year, while copper wire and cable prices rose 13.8%. Nonresidential input prices were up at a 5.3% annualized rate in 2025, but contractors are broadly optimistic about their profit margins over the next six months, says ABC’s Construction Confidence Index.

Crude petroleum and natural gas prices fell 2.8%, while unprocessed energy materials prices decreased 2.5% in August, according to an ABC analysis of the PPI data. Contractors are generally optimistic about the rest of the year and 2026, but the impact of tariffs and higher prices looms over future purchasing.

ABC’s Construction Confidence Index for sales and profit margins declined in July, while the reading for staffing levels rose to the highest level since April. The readings for all three remain above 50, indicating expectations for growth over the next six months.

On the design side, the American Institute of Architects/Deltek Architecture Billings Index, which has at least a one-year lag between billings and construction, remains negative at 46.2 in July.