'Buy Now': Contractors Race Against Trump Tariffs To Secure Materials

Construction industry leaders are moving quickly to secure materials and labor ahead of potential policy changes under President-elect Donald Trump that could impact project costs and workforce availability.

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Trump’s proposed tariffs – up to 20% on all imports and 60% on Chinese goods – have spurred urgency among contractors. “I suspect among many contractors, there is a rush to buy critical materials and equipment before tariffs might have any impact on prices,” Anirban Basu, chief economist of the Associated Builders and Contractors, said to the Boston Business Journal, noting the surge in demand could ironically drive up near-term prices.

The stakes are especially high for materials sourced from China, which supplies about 18% of U.S. imports, including essential building materials like drywall. Unlike Trump’s first term, when targeted tariffs on steel and aluminum were offset by low interest rates, today’s higher financing costs leave less room for absorbing price increases.

Labor availability presents another critical concern. The Boston Business Journal noted, citing data from the National Immigration Forum, that immigrants comprise roughly 30% of the U.S. construction workforce, reaching 40% in states like California and Texas. 

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Trump’s promised immigration restrictions could further strain an industry already struggling with workforce shortages. In October, while the sector added 8,000 jobs and showed 2.8% annual growth, construction unemployment rose to 4.2%.

“If all of a sudden it becomes more difficult to access that workforce, that would tend to be inflationary with respect to wages and project-delivery costs,” Basu said. Major industry groups, including the Associated General Contractors of America, are urging the incoming administration to expand legal pathways for construction workers.

Developers are accelerating predevelopment activities in response. Louis Molinini, Americas market lead at Jones Lang LaSalle, said there has been increased advisory and predevelopment activity since September’s Federal Reserve rate cut, though actual construction starts may lag 9-12 months.

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Current market conditions already pose challenges. While construction input prices have stabilized – rising just 0.3% in October according to federal data cited in the report – overall costs remain elevated. Total construction starts fell 6% in September to an annual rate of $1.1 trillion, the Boston Business Journal noted, though year-to-date figures through September show a 2% increase over 2023.

The specialized labor market faces additional pressure from booming data center and manufacturing facility construction. “You’re going to be paying a premium for those subcontractors to be available because the money is still flowing so quickly and heavily through data centers,” Molinini said.

Some analysts suggest Trump’s actual policies may prove less aggressive than campaign rhetoric, given stock market sensitivity to trade disruptions. “While contractors are confident, in my mind, as an economist, the outlook is cloudy,” Basu said.

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