Contractors are pricing jobs without a clear read on what their materials will ultimately cost in this environment, according to industry sources.
The Trump administration’s latest adjustment to Section 232 tariffs, which were announced April 2 and took effect Monday, raise duties to as high as 50% on goods made almost entirely of steel, aluminum or copper. Derivative goods “substantially made” of steel, aluminum or copper incur a 25% levy.
Though the change aims to strengthen domestic manufacturing capability, contractors on the ground say the direct effects on construction projects will vary widely.
“Upon initial review, the updated Section 232 requirements announced on April 2 may influence project pricing, but the full impact will take time to understand,” Tim Jed, supply chain leader at Santa Clara, California-based DPR Construction, told Construction Dive. “In some cases, we expect little to no change in material pricing. In others, cost increases are likely.”
That variability depends largely on how much tariffed metal is embedded within a product. Certain electrical grid-related products may also see some pricing relief, particularly where steel, aluminum or copper content make up a smaller share of the total cost, said Jed.
Impacts on key construction materials
The materials most affected remain largely consistent with previous rounds of tariffs.
Steel products, such as structural steel, decking and studs, have already seen sustained cost pressure. Copper and aluminum materials have also experienced increases recently.
But some industry players downplay the overall effect on construction budgets, according to Barry Zekelman, executive chairman and CEO of Zekelman Industries, a Chicago-based steel tube and pipe manufacturer.
“We do not think that these changes will significantly impact how contractors price jobs,” Zekelman said. “To keep things in perspective, the steel frame of a building is about 8% to 9% of the total cost of a typical commercial building. The materials in the steel frame are about 33% of that cost. So, the total impact to a building will not be significant even if prices move up.”
For mission critical buildings, such as data center projects, the percentage of cost of the steel frame is significantly less than the typical commercial building, said Zekelman. Domestic supply may also help blunt the impact of tariffs on certain materials.
In other words, Zekelman does not expect higher tariffs to delay or pause projects. Jed agrees, adding contractors appear to be absorbing much of the pressure rather than delaying projects outright.
“Outcomes vary by material and market, but overall, supply chain partners are working collaboratively to mitigate impacts and protect project outcomes,” said Jed. “From DPR’s perspective, overall demand remains healthy and the project pipeline continues to be strong.”
Nevertheless, the Iran war could amplify pricing pressures in the months ahead. The region is critical for aluminum and sulfur, used in nickel production, which may introduce renewed volatility for these materials.
“Recent disruptions in the Middle East are affecting freight routes and oil markets, creating logistics challenges that, in some cases, are extending delivery timelines and increasing freight costs,” said Jed. “These dynamics reinforce the importance of proactive supply chain planning and real-time market visibility.”
And unlike other industries, construction firms may also struggle to minimize those impacts just because of where the industry sits along the supply chain, said Jed.
For example, a key provision known as the First Sale Rule allows importers to calculate tariffs based on the earliest transaction in a supply chain for a project, potentially lowering duties. But construction procurement, which often relies on distributors and bundled materials, makes that tough to do, said Jed.
“Applying the First Sale Rule requires a high level of transparency and documentation across multiple tiers of the supply chain, including traceability of goods and detailed upstream cost breakdowns,” said Jed. “Given how construction procurement typically operates … it is difficult for construction-related operations to take advantage of this rule.”
In other words, contractors could face more direct exposure to these tariff-related cost jumps than other sectors that can better optimize their supply chains.
