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How 2025 Tariffs Are Impacting U.S. Construction Costs: A Risk Outlook from Kenneth F. Wille, PE

  • Writer: KOW Building Consultants
    KOW Building Consultants
  • 3 days ago
  • 3 min read

Disclaimer: The content and data in this post are the property of Kenneth F. Wille, PE, and KOW Building Consultants. All insights are provided as an estimate and should not be interpreted as a financial guarantee or cost prediction. Use this data at your own risk.


The construction industry is entering a period of heightened volatility. With new tariffs introduced in early 2025, material pricing and project forecasting have become increasingly uncertain. Below, KOW Building Consultants’ President and Principal Engineer, Kenneth F. Wille, PE, offers his expert analysis on how tariffs may affect U.S. construction costs, timelines, and lender expectations.


🎥 Watch the Full 2025 Construction Pricing Outlook Webinar

For a deeper dive into the data, insights, and risk factors shaping construction pricing in 2025, watch this recorded webinar hosted by Kenneth F. Wille, PE, President of KOW Building Consultants. Ken covers key issues like tariffs, inflation trends, labor shortages, and material procurement challenges, offering clarity for developers, lenders, and project stakeholders navigating today’s volatile market. Otherwise, continue reading!



🔎 Tariff Impact on Construction Costs: A 2025 Risk Analysis

Kenneth has assigned risk levels to key market indicators using a 10-point index (10 = highest risk):


1. Market Uncertainty – Risk Level: 9/10

We're experiencing one of the most uncertain construction climates in recent memory. Despite a 90-day pause on some tariffs earlier this year, significant duties remain in place on imports from China, Mexico, and Canada. The frequent shifts in policy have introduced a high level of unpredictability for developers, lenders, and contractors alike.


2. Lender Resilience – Risk Level: 8/10

National and global lenders are showing more resilience than regional counterparts, but all lending institutions are treading cautiously. We're now receiving more inquiries and requests for market insight than we did during the Great Recession or the height of COVID-19. The fear of construction budgets ballooning by 30% or more has made underwriting significantly more complex.


3. Construction Material Price Increases – Risk Level: 9/10

Material costs are already climbing in response to tariff changes and supply chain strain:

  • Steel: Up 15%–25% since January 2025

  • Aluminum: Up 8%–10%

  • Lumber: Canadian lumber tariffs now at 34.5%, with prices up 17.2% YoY

  • Concrete Products: Up 41.4% over five years (Feb 2020–Jan 2025)

  • Appliances: Affected by a 10% blanket import tariff and a 104% tariff on Chinese imports


4. Breakdown of 2025 Tariff Rates – Risk Level: 8/10

Here’s a summary of key recent tariff actions affecting the construction supply chain:

  • China

    • General Imports: 20% (effective 3/4/2025)

    • Steel/Aluminum: 25%

  • Mexico

    • General Imports: 25% (effective 3/7/2025)

  • Canada

    • General Imports: 25% (2/4/2025)

    • Energy Products: 10%

  • Steel & Aluminum (Global)

    • Steel: 25% (reinstated 3/12/2025)

    • Aluminum: 10% (reinstated 3/12/2025)


5. The Bottom Line – Risk Level: 6/10

Despite all the signs, material costs haven’t skyrocketed yet—but they likely will. While global supply factors like fuel and food prices are stabilizing, construction-specific inputs are trending upward. Kenneth’s January forecast of a 10%–12% increase for wood and steel construction now appears conservative.

Expect pricing volatility throughout Spring and Summer 2025.

💬 Final Thoughts from Kenneth F. Wille, PE

“We’re not out of the woods yet. As we move from winter into spring, the full ripple effect of these tariffs on construction pricing will become clearer. Let’s stay alert, proactive, and communicative as we navigate this together.”

About the Author:


Kenneth F. Wille, PE, is the President of KOW Building Consultants, a full-service building consulting firm providing construction monitoring, cost reviews, and property condition assessments nationwide. With decades of experience navigating complex construction cycles, Ken provides clear-eyed insight into market trends and risks.


Checkout our most recent webinar: KOW's 2025 Construction Pricing Outlook


Need help navigating construction pricing and risk in 2025?

Contact KOW Building Consultants for expert guidance tailored to your project.




 
 
 

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