The Negative Impact of Tariffs on Construction Projects

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by

Richard Cartright

🏗️ How a 25% import tariff will impact construction.

Image of border between Canada and United States where the impact of tariffs on construction projects will become an issue.

The United States imports thousands of products critical for keeping projects on schedule and within budget, and one of our biggest trade partners is Canada. The United States construction industry relies heavily on Canadian imports for essential building materials. The incoming administration is proposing a 25% tariff on all Canadian imports. Let’s take a look at the impact of import tariffs on construction the impact tariffs will have on construction projects. Learn more about what a tariff is.

📊 Tariff Impact by Material Category

1. Wood and Millwork

  • Annual Import Value: $16 billion – Tariff Impact: $4 billion
  • Flooring, cabinetry, doors, and moldings

2. Stone Finishes

  • Annual Import Value: $5 billion – Tariff Impact: $1.25 billion
    Granite, marble, and quartz, floor and wall tiles and countertops.

3. Metal Fixtures and Fittings

  • Annual Import Value: $11 billion – Tariff Impact: $2.75 billion
    Structural steel, plumbing fixtures, and metal hardware.

4. Glass and Glazing Products

  • Annual Import Value: $2 billion – Tariff Impact: $500 million
    Glass panels, doors, windows, storefront, and shower enclosures.

5. Ceramic and Porcelain Tiles

  • Annual Import Value: $2.6 billion – Tariff Impact: $650 million
    Fired clay wall and floor tiles, decorative elements, and finishes.

6. Paints and Coatings

  • Annual Import Value: $1 billion – Tariff Impact: $250 million
    Interior and Exterior paints, epoxy, and specialty finishes.

7. Insulation Products

  • Annual Import Value: $1.3 billion – Tariff Impact: $325 million
    Fiberglass, sprayed, and rigid foam board insulation.

8. Kitchen and Bathroom Fixtures

  • Annual Import Value: $6 billion – Tariff Impact: $1.5 billion
    Vanities, faucets, and bath accessories.

9. Exterior Finishes

  • Annual Import Value: $2.5 billion – Tariff Impact: $625 million
    Siding and decking materials.

You can see that the United States construction industry relies heavily on Canadian imports. Let’s take a look at the impact of Tariffs on Canadian Imports will have on the construction projects.

💥 Total Cost Impact: Nearly $12 Billion

Total Import Value: ~$47.4 billion
Estimated Additional Cost Due to 25% Tariff: $11.85 billion

The total cost increase will reach $12 billion to the cost of construction, which will have a huge impact to the industry at large. When we account for taxes and fees associated with project design and construction the increase could be as much as 50% on a per project basis.

💥 Impact on Scope, Quality, & Time

The increase will squeeze project owners, designers, and contractors, making construction projects more expensive and potentially slowing down the industry at a time when inflation and markets are already significant challenges.

The increase in costs will create pressure industry wide that will no doubt affect project scopes, quality, and durations. This shift could be particularly detrimental in sectors like non profit, housing, and small commercial businesses where budgets are already tight.

Some may decide to scale down their project scopes either by eliminating elements, combining functions in spaces, or reducing the square footages of their projects in order to get to a tenable budget.

Reducing quality would impact aesthetics, durability, and maintenance requirements, which will effect operating costs and the need for future projects.

A shift in products used will add pressure on suppliers to change production runs in order to meet demands. Such changes can affect the availability of products, and lead to project delays.

Given time, these adjustments will ripple through the industry. Everything from new ground-up construction to remodels will be affected. The changes will increase the pressure on manufacturers to develop cheaper and cheaper versions of their products, further reducing the quality of new builds.

🔍 Balancing Trade Policy and Construction Economics

The proposed tariffs on Canadian goods aims to protect domestic industries, but they come at a cost. For the construction sector, higher material prices will mean delayed projects, reduced affordability, and stunted growth. The key challenge lies in balancing trade policy with the economic realities of an industry that fuels growth and development.

💬 How Are You Preparing?

Are you bracing for these potential cost increases? Are you concerned about how these changes will affect your project?

Contact Us to discuss the impacts on your business and explore solutions together. Share your thoughts below! 👇

#ConstructionIndustry #Tariffs #TradePolicy #CostManagement #BuildingMaterials #SupplyChain