Navigating Tariff Uncertainty in Construction: What Industry Leaders are Seeing

The construction industry has always navigated market volatility, but the current tariff environment presents an unusual challenge. It’s not just the price increases that are disrupting projects—it’s the uncertainty itself. As someone who has spent decades in commercial construction, I found myself struggling to give clients clear answers about how tariffs would impact their projects. So, I did what any curious general contractor would do: I asked around.

I reached out to manufacturers, suppliers, and subcontractors across our supply chain to understand what they’re experiencing firsthand. Their responses paint a picture that every owner, developer, broker, and architect should understand as they plan projects in 2025 and beyond.

The Price Impact: Real, But Opaque

Across the responses I received from subcontractors and suppliers, material price increases attributed to tariffs range from 10% to 35%, depending on the material and supplier.

Steel and aluminum have been hit hardest, with manufacturers reporting increases at the upper end of that range.
Electrical materials and components from China have seen more modest impacts in the 10-15% range.
Material handling equipment from China and Korea is experiencing 10-25% increases.
Flooring products—both imported and domestic—are seeing similar impacts with 10-25% increases.

But here’s the fundamental challenge: the calculations are almost entirely opaque. Unlike sales tax, which appears as a clear line item on every material purchase showing the exact rate and amount, tariff charges rarely specify from which country the goods came, when they crossed the border, or which specific components are being taxed. Some manufacturers show separate line items for tariff costs, but these are typically percentage adders or dollar amounts without supporting documentation. Others simply cite vague language like “raw material costs.”

This lack of transparency creates questions about whether increases truly reflect tariff impacts or represent broader margin adjustments. Multiple respondents noted they’ve seen increases starting well ahead of tariff implementations, suggesting suppliers are anticipating costs or using the climate to adjust pricing more broadly. One major material purchaser put it bluntly: while there may be basic calculations to justify increases, much of this feels like opportunistic pricing enabled by macro-economic uncertainty.

Uncertainty and Market Paralysis as the Real Cost

More than one industry professional described a “wait and see” attitude taking hold in the market. One subcontractor observed that tariffs are creating a pause in buying decisions, with customers delaying commitments. This hesitation ripples through the entire construction ecosystem—when owners wait to commit, projects stall.

The inconsistency compounds the problem. Multiple respondents mentioned receiving price increase notifications, then retractions, then new announcements weeks later. One distributor described receiving tariff-related communications “almost daily.” This isn’t a one-time adjustment the market can absorb and move forward—it’s ongoing recalibration that makes planning extraordinarily difficult.

The New Normal in Contracts

The tariff environment has made price qualifiers nearly universal. Language like “Tariff Fee” or “Tariff Cost” clauses now appears in most proposals. General contractors and subcontractors are passing these clauses through to clients, creating a cascade of contingencies from manufacturer to end user.

But enforcement remains problematic. Multiple subcontractors reported that despite clear tariff language in their proposals, some clients are refusing to pay increases on existing contracts. One flooring subcontractor shared a particularly difficult example: they ordered a custom rug from Italy in April 2025, prepaying in full. Eight weeks later, upon delivery, they received an additional invoice for a 25% tariff charge with no advance notice. The general contractor refused to pay, and the subcontractor was forced to absorb the cost, or litigate.

This scenario illustrates the gap between contractual protection and practical enforcement. Many subcontractors are eating costs they explicitly tried to protect against, effectively subsidizing uncertainty rather than passing it through as intended.

Strategic Responses to Tariff Uncertainty Vary

Companies are adopting different strategies to navigate this environment. Some are choosing radical transparency—raising prices when necessary but being direct with customers about tariff impacts. One distributor reported that they discussed adding qualifiers but ultimately decided against it, instead having honest conversations when prices increased. Most customers have understood and haven’t pushed back significantly.

Others are using inventory strategically. Companies with strong cash flow are buying ahead of announced increases, banking material at lower prices to shield customers from future impacts. This requires capital and storage capacity, but it’s proving effective for those who can execute it.

And some are taking a pragmatic view grounded in experience. One material handling company leader noted this isn’t their first experience with significant tariffs and they expect to navigate it successfully again.

What This Means for Your Projects

For developers, brokers, and architects planning projects, several practical takeaways emerge:

Build material contingency into your budgets. The 10-35% range reflects increases on material costs, not total contract value, but it’s what suppliers and subcontractors are actually experiencing. Steel-intensive projects face the highest exposure, though virtually no material category is immune. Even domestic products are seeing price increases as suppliers adjust to the new competitive landscape.
Expect tariff clauses in proposals. They’re now standard practice across the industry. The challenge is that without transparent calculations showing country of origin, border crossing dates, and specific taxed components, it’s difficult to verify whether any specific increase is legitimate or opportunistic.
Timing matters more than usual. Market volatility means pricing today may not hold for projects starting in six months. Strategic distributors with well-managed inventory may be able to offer better near-term pricing by buying ahead of announced increases. And be prepared for the reality that even clear contractual language is proving difficult to enforce when market conditions shift.
Recognize the universal uncertainty. The manufacturers don’t have perfect information. The suppliers are getting contradictory signals. Your general contractor is synthesizing incomplete data. This isn’t an excuse for poor planning, but it is the reality of the current environment.

Moving Forward with Clear Eyes

The tariff situation in construction isn’t a crisis, but it’s not business as usual either. The uncertainty is real, the price impacts are material, and the ripple effects touch every project decision. The industry professionals I spoke with aren’t panicking, but they are adapting—adjusting contracts, managing inventory strategically, and communicating openly with their customers.

At KasCon, we’re taking the same approach: acknowledging the complexity, building appropriate protections into our proposals, and having transparent conversations with our clients about what we’re seeing and what it means for their projects. In an uncertain environment, that clarity—even when the news isn’t entirely comfortable—is the most valuable service we can provide.

The construction industry has weathered trade disputes, material shortages, and economic upheaval before. We’ll navigate this too. But doing so successfully requires all of us—owners, designers, contractors, and suppliers—to communicate clearly, plan realistically, and maintain the flexibility to adapt as conditions continue to evolve.

Contact KasCon to learn how we can help you navigate your next project.