US labour and materials costs rise as builders await tariffs ...Middle East

The cost of materials and services used in nonresidential construction in the US rose 0.2% from May to June and 2.3% from June last year, the biggest 12-month increase since February 2023 according to an analysis by trade body Associated General Contractors of America (AGC) based on government data.

The AGC warns that import tariffs on goods from abroad, due to take effect on Friday, 1 August, will increase construction costs and reduce market demand.

Tariffs on steel and aluminium are at 50%, having risen in June from a 25% rate implemented in March.

On 27 June, the EU signed a deal with President Trump for a 15% tariff on imports into the US, down from a planned 30%.

The AGC says the cost of steel, aluminium, lumber and wood has increased over the last month.

“The fact that construction materials prices are rising even before the steepest proposed tariffs have taken effect doesn’t bode well for what will happen in August if the promised new tariffs are implemented,” warned AGC chief economist Ken Simonson.

“Rising construction costs and economic uncertainty are already causing some owners to put projects on hold, which will only get worse if costs jump again.”

‘You just can’t get on with stuff’

Meanwhile, tariff confusion, the pressure on labour from immigration enforcement raids, and stubbornly high interest rates are combining to suppress growth in US construction output, Chris Soffe, Vice Chair of consultant Gleeds Americas told GCR.

“It’s making it very difficult for businesses to plan. Inflation’s running at 4–6%, which is lower than during the pandemic, but not the 2–3% which is more manageable.

“Private equity is sitting on the fence. Big corporations are in a holding pattern. I read that architecture and engineering billings are down for the third quarter in a row, which doesn’t bode well for the next year or two. I see the entire situation right now as a forward-planning impediment. You just can’t get on with stuff.”

Making tax cuts work

Jeffrey Shoaf, AGC chief executive, commented on the predicted benefits of Trump’s Big Beautiful Bill against the tariff deadline: “The construction industry is poised to benefit from greater tax certainty as well as the administration’s efforts to streamline permitting and reduce needless regulatory burdens.“Finding a way to provide greater certainty on materials prices is the best way to make sure the new tax and regulatory approach have the best possible impact on economic activity.”

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Further Reading:

Tariffs to cause ‘dire’ affordability crisis in Canada and US, housebuilders warn Trump’s tariffs will stoke US housing crisis, builders say

US labour and materials costs rise as builders await tariffs Global Construction Review.

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