April 2, 2025 | Market Update
Construction supply chains across North America face severe disruption as new tariffs take effect today, compounding existing material shortages and labor constraints. The U.S. Census Bureau reports construction spending rose 0.7% in February to $2,195.8 billion, but the American Institute of Architects has recorded the first decline in new project inquiries since 2020, signaling trouble ahead.
“The construction industry finds itself at a critical inflection point where tariff policies are creating unprecedented volatility,” explains Charlie Dougherty, Senior Economist at Wells Fargo Economics. Construction input costs already remain 38.7% higher than February 2020 levels, while NAHB data shows builders face approximately $9,200 in additional costs per home due to recent tariff actions.
Dodge Construction Network reveals projects now take 6.5 months longer to plan than in 2019, while ING projects a 2% sector decline in 2025 as “waning fiscal support, weaker office construction demand, and tight credit conditions” impact growth.
INDUSTRY EXPERTS RECOMMEND IMMEDIATE ACTION:
- Diversify supplier networks across multiple regions
- Lock in long-term agreements with price escalation caps
- Implement real-time material tracking systems
- Incorporate material price escalation clauses in contracts
- Optimize material utilization through advanced BIM modeling
- Form buying cooperatives with other construction firms
- Create separate contingency budgets for tariff-related increases
