Global Trade Alert, a trade-policy monitoring group, estimates the U.S. trade-weighted average tariff rate now stands at 13.2%—below the pre-ruling 15.3% level but well above the 8.3% rate that would have applied absent a replacement measure.

For construction, what matters most is what did not change. Section 122 does not stack on covered primary steel and aluminum already subject to Section 232 tariffs. Those inputs remain tariff-embedded. Equipment, fabricated assemblies and other manufactured components outside the 232 categories now face the 10% surcharge. That includes items such as switchgear, transformers and specialized heavy equipment sourced globally for infrastructure projects.

S&P Global Ratings said in a Feb. 23 update that tariff levels remain historically elevated and that its forecasts for GDP, employment and interest rates are largely unchanged. From a credit standpoint, trade friction persists.

Deniz Mustafa, senior director of infrastructure finance at the Associated General Contractors of America, said lenders and bond markets largely anticipated a swift policy response if the high court invalidated the prior regime.

“I don’t think anyone that’s been keeping close track of this story was thinking that that would be it—there would be no more tariffs and we’re done,” Mustafa said. In the near term, he added, it is too early to see measurable shifts in credit spreads or underwriting assumptions. But questions remain about what follows the 150-day window.

Contracts and Cost Allocation Risk

“The new tariffs imposed under Section 122 will affect the construction industry in two distinct ways,” Anirban Basu, chief economist for Associated Builders and Contractors, told ENR by email. “First, and most directly, this broad 10% levy will put renewed upward pressure on certain construction materials prices.”

The direct effect is limited by Section 232 carve-outs and USMCA compliance, Basu said, but price volatility remains a factor.

Josh Zive, a partner at Bracewell who focuses on international trade and customs law, said Section 122 presents immediate exposure precisely because it has little litigation history.

“The most immediate threat is the Section 122 tariffs that have already been put in place,” Zive said. The global surcharge “covers a wide range of materials,” and “a vast amount of construction equipment will end up touched by those tariffs.”

Legal exposure may also sit closer to contractors than many assume.

“The importer of record is the party legally responsible for customs compliance and payment of duties at entry under federal law,” said Trent Cotney, head of the construction practice group at Adams & Reese and general counsel to the National Roofing Contractors Association. If a contractor coordinates importation, Cotney said, it may bear the legal obligation to pay tariffs and ensure accurate entry.

Refunds, where available, flow to the entity that paid the tariff invoice — typically importers or logistics firms, not contractors, Mustafa explained. Recovering costs through supply chains can become complex, involving suppliers, manufacturers and price agreements. “The whole refund process is going to be a mess,” he added.

Pass-through risk, therefore, hinges on contract language. Many agreements treat duties and taxes as part of the contractor’s cost of work unless a change-in-law or tax-adjustment clause expressly captures tariff increases. Where owners reject that interpretation, contractors may be forced to absorb the cost.

Mustafa said that during prior tariff episodes, suppliers shortened quote validity windows, in some cases from months to weeks, forcing contractors to build contingencies into bids. If suppliers hold pricing for one week but owners require bids to remain valid for a month or more, “that’s when you build in that contingency,” he said.

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Public Owners and Project Pipeline

For publicly funded projects with fixed appropriations, flexibility is often limited.

Mustafa cited previous federal infrastructure programs, such as the Infrastructure Investment and Jobs Act, where inflation alone reduced purchasing power, forcing local agencies to cover cost increases through bonds, taxes, or scope reductions. 

Citing a study by the Eno Center for Transportation, Mustafa noted how the IIJA returned nearly $60 billion in value due to inflation. Federal aid programs may allow escalation mechanisms in some cases, but “usually the locals will have to try to find it somewhere else,” he said.

Economic modeling reinforces the pressure. The Budget Lab at Yale finds that, even without IEEPA tariffs, the remaining tariff stack falls most heavily on metals, vehicles and electronics—inputs central to infrastructure and energy construction. Yale projects that while manufacturing output expands modestly under the current environment, construction output contracts 2.4% in the long run.

Mustafa expects policy volatility—more than the 10% rate itself—to weigh on decision-making.

“Yes, because there’s uncertainty about what’s going to happen in the next 150 days,” he said when asked whether the surcharge could affect project starts or backlog in the next six to 12 months.

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The administration has signaled additional Section 301 actions and is advancing multiple Section 232 investigations that could conclude in the coming months. Those authorities allow country- or sector-specific tariffs, and are not time-limited like Section 122.

The Court curtailed one executive tool. For construction firms, importer-of-record liability, contract allocation risk and tariff-embedded material costs remain intact—and may yet shift under new investigations.

While the mechanism changed, the exposure did not and now the volatility moves with it.