The latest construction input price surge underscores concerns among contractors about material costs, particularly in light of new steel and aluminum tariffs, according to Associated General Contractors of America.

Even before Trump’s inauguration, the high probability of tariffs already appeared to have been driving price increases, said Ken Simonson, AGC chief economist.

“The mere threat of new tariffs appears to have led to a significant jump in the cost of many construction materials,” said Simonson, noting that the January data was collected prior to Trump’s inauguration. “Contractors that have started fixed-price projects will be squeezed by higher material costs, while rising costs and delayed availability will make future projects more expensive.”

The sharp increase in prices signals a shift after a year of relative stability for contractors. That’s largely due to three factors, said Basu.

“First, energy prices rose sharply. Second, producers often raise their prices at the start of the year,” said Basu. “And third, many purchasers rushed to buy inputs before potential tariffs could go into effect, and that surge in demand pushed prices higher.”

Of these factors, tariffs will likely have the most lasting impact, said Basu.

“A strong majority of contractors expect their sales to increase over the next six months,” said Basu. “The combination of increased demand for construction inputs and ongoing supply chain confusion suggest input price escalation could accelerate through the first half of 2025.”

Source: constructiondive.com