We know contractors were hoping for a little price stability in 2025, but the latest steel and aluminum tariffs might have other plans.

On March 4th, the U.S. imposed a 25% tariff on steel and aluminum imports from Canada and Mexico. And on March 12th, that 25% tariff now applies to all steel and aluminum imports — no exemptions. This includes all foreign metals used by American businesses, including manufacturers of cars, canned foods and drinks, solar panels and other products.

Canada is by far the largest supplier to the U.S. of both steel and aluminum. Brazil, Mexico, South Korea and Vietnam also ship the United States significant amounts of steel, while the United Arab Emirates and China send the U.S. aluminum.

The idea behind these tariffs? The White House says they’re meant to support American steel and aluminum producers. But for contractors and developers, they’re likely to mean higher project costs and tighter budgets.
 

Rising Prices and Supply Challenges
Steel prices have already been climbing since late 2024, and these tariffs are adding fuel to the fire. While the goal is to boost domestic steel production, the U.S. simply doesn’t make enough to meet demand. That means builders will still need to rely on imports from countries like Canada, Mexico, Brazil, and China — just at a higher price.

Unfortunately, that’s not the only concern. If trading partners respond with their own tariffs, costs could rise even further, adding more uncertainty to an already challenging market.
 

Projects Possible Already Feeling the Tarrif-fying Impacts
• Large-Scale Developments: High-rise apartments, office buildings, and major government projects will likely see the greatest financial strain due to their reliance on structural steel.

• Infrastructure Projects: Roads, bridges, and rail developments will also experience price increases.

• Smaller Projects & Alternative Approaches: Some developers may explore alternative materials, such as shipping container conversions, which could be used for affordable housing and smaller commercial properties.
 

How to Navigate the New Tariffs
With the steel and aluminum tariffs now in effect, contractors and developers need to rethink their strategies to keep costs in check. Here are a few key ideas to consider:

Review Your Contracts
• Now’s the time to revisit contracts and, if needed, add cost escalation or force majeure clauses to account for material price fluctuations. Contractors will want these protections, but owners may push back — so be prepared for that conversation.
 

Look for Domestic Options
• U.S. steel mills are ramping up production, but supply might still be tight. Keeping a close eye on availability and planning for potential delays can help avoid surprises down the road.
 

Reevaluate Project Budgets
• With steel-heavy projects, like infrastructure builds, costs could climb fast. Developers should take a fresh look at budgets to ensure projects remain financially viable.
 

Be Strategic with Purchasing
• If possible, buying materials in bulk or locking in prices with suppliers early could help soften the impact of rising costs.
 

What’s Next?
While we’re probably not looking at the kind of supply chain chaos seen during the pandemic, these tariffs will still pack a financial punch for contractors, developers, and suppliers. Prices are shifting, and more trade policy changes are likely coming, so staying informed will be crucial.

By planning ahead and adapting to the new cost landscape, construction businesses can put themselves in a stronger position as 2025 continues to unfold.

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Information for this post was pulled from "Impact of Steel Tariffs on the Construction Industry" written by Saul Ewing LLP and posted on JPSupra.com on March 7, 2025. 

This information is also intended for general informational purposes only and should not be considered as legal advice. MBEX strongly recommends consulting with your business's attorney or legal advisor before taking any actions based on its content.