UPDATE (4/9/25 at 5:25 PM PST): Shortly after original publication of this article on April 9, 2025, President Trump announced a 90-day pause on all reciprocal tariffs, except for Chinese imports that will now be subject to an increased levy of 125%. The White House later clarified that a 10% universal tariff on all imported goods will remain in place during the pause on reciprocal tariffs, with exceptions for imports from Canada and Mexico. However, the 90-day pause on reciprocal tariffs does NOT impact the 25% tariffs on all steel and aluminum imports, which remain in place as a distinct measure under Section 232 of the Trade Expansion Act of 1962.
At an event dubbed “Liberation Day” held at the White House on April 2, 2025, President Donald Trump announced an across-the-board 10% baseline tariff for all imported goods, on top of individualized “reciprocal” tariffs on dozens of major U.S. trade partners. These are only the latest in a head-spinning series of tariffs imposed this year by the Trump administration, including sweeping 25% tariffs on all steel and aluminum imports announced in February.
The recent changes in American trade policy present distinct challenges for the construction sector, which consistently imports the largest annual share of steel and aluminum in the U.S. economy. This article explores the latest developments in the rapidly shifting global trade landscape and their effects on the industry.
Imported Construction Materials Subject to Expansive, Multi-Layered Tariffs
The “Liberation Day” duties, formally announced by executive order on April 2, 2025, add new layers to U.S. import tariffs:
- 10% baseline tariff – Applied to essentially all imports from all U.S. trade partners.
- Additional reciprocal tariffs – Selectively imposed on over 50 countries, with higher rates for countries with which the U.S. has its largest trade deficits (for example, 34% for China and 46% for Vietnam), while other countries, like Australia, face only the baseline rate. President Trump characterizes the reciprocal tariffs as retribution for unfair trade practices that have harmed the American economy. The executive order announcing the reciprocal tariffs provides that any retaliatory tariff imposed on U.S. imports by a trading partner is grounds for a commensurate increase in the reciprocal tariff rate for the retaliating country.
The baseline tariff went into effect on April 5, 2025, and the individualized reciprocal rates went into effect on April 9, 2025. The White House’s official statement on the Liberation Day tariffs indicates they will remain in effect “until President Trump determines that the threat posed by trade deficits and nonreciprocal treatment is satisfied, resolved, or mitigated.”
The 10% ad valorem baseline rate applies to all imported goods. However, steel and aluminum products subject to the previously implemented Section 232 tariffs (discussed below) are exempted from the additional reciprocal component of the Liberation Day tariffs. This means that steel and aluminum imports are now subject to a 25% duty, plus the new 10% baseline rate, but exempt from any additional reciprocal tariff based on country of origin.
Latest Steel and Aluminum Tariffs Are Broader Than 2018 Predecessor
On Feb. 10, 2025, President Donald Trump issued proclamations imposing 25% tariffs on all steel and aluminum imports into the United States under Section 232 of the Trade Expansion Act of 1962 (19 U.S.C. 1862). These tariffs went into effect on March 12, 2025.
The Section 232 tariffs represent a significant expansion of steel and aluminum tariffs that the first Trump administration imposed in 2018:
- Broader scope – The more recent tariffs cover a wider range of steel and aluminum products, such as screws, nails, and bolts, that were exempt under the 2018 tariffs.
- Larger value – Experts estimate that approximately $178 billion worth of imported steel and aluminum products are affected — roughly three times the value affected by the 2018 tariffs.
- Fewer loopholes – Exceptions for key trading partners have been eliminated, along with the administrative process that allowed companies to petition the Commerce Department for exemptions on certain products not sufficiently available in the U.S.
Early Impacts on the Construction Sector
Firms across the industry are feeling early impacts of the tariffs.
Rising steel and aluminum costs
Prices for iron and steel spiked in February 2025, contributing significantly to a 9.0% annualized increase in nonresidential construction input prices over the first two months of the year, according to Associated Builders and Contractors. The Wall Street Journal reported average cost increases of 5% to 8% for materials like steel cable and concrete reinforcing bars, alongside a 4% climb in nail costs, shortly after the Section 232 tariffs took effect.
Broader impact on construction costs
Recent price spikes compound longer-term trends; ABC notes that overall construction inputs now sit roughly 41% higher than in February 2020. The Liberation Day tariffs will increase cost pressures on other imported building materials besides steel and aluminum, though it may take some time before these cost increases are priced into the market.
Secondary effects: domestic supply strain
Tariff impacts extend beyond increased import costs. Even when materials subject to import duties can be domestically sourced, increased demand for U.S.-made goods can strain supply chains, pushing lead times back in addition to driving up prices.
Bigger Picture: Increased Project Risk & Uncertainty
The “Liberation Day” tariffs and the Section 232 steel and aluminum tariffs collectively increase the risk for projects. Future spending is particularly vulnerable.
Faced with potential cost increases from contractors navigating these tariffs, owners might choose to cancel, defer, or scale back upcoming projects rather than absorb higher costs or renegotiate fixed-price contracts. Projects already underway could also face delays as firms assess the financial and logistical impacts of rising material costs and supply chain disruption.
UPDATE (4/9/25 at 5:25 PM PST): Shortly after original publication of this article on April 9, 2025, President Trump announced a 90-day pause on all reciprocal tariffs, except for Chinese imports that will now be subject to an increased levy of 125%. The White House later clarified that a 10% universal tariff on all imported goods will remain in place during the pause on reciprocal tariffs, with exceptions for imports from Canada and Mexico. However, the 90-day pause on reciprocal tariffs does NOT impact the 25% tariffs on all steel and aluminum imports, which remain in place as a distinct measure under Section 232 of the Trade Expansion Act of 1962.
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