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February 01.2026

2 Minutes Read

How Tariffs are Raising Nonresidential Construction Costs by 3.2% in 2025

Dump truck and bulldozer clearing snow highlighting tariffs impact on nonresidential construction costs.

Understanding the Rise of Nonresidential Construction Costs Due to Tariffs

In 2025, nonresidential construction input costs rose by 3.2%, a significant increase driven primarily by tariffs imposed on various construction materials. This upward trend has significant implications for project control managers, cost engineers, and other professionals in the construction sector, necessitating an understanding of both current costs and future projections.

The Inflationary Pressure of Tariffs on Materials

The tariffs have a direct impact on prices, particularly for materials like copper wire and aluminum, which saw dramatic year-over-year increases of 22% and 30.5%, respectively. As Ken Simonson, chief economist for the Associated General Contractors of America (AGC), noted, these tariffs create a market dynamic where U.S. sellers can raise prices due to decreased competition from foreign imports. This situation is expected to persist into 2026 unless tariff policies change.

Current Market Climate and Forecasts

Despite the rising costs, contractor optimism remains relatively high. According to Anirban Basu, chief economist at the Associated Builders and Contractors (ABC), around 70% of contractors expect profit margins to remain stable or even grow in the coming quarters. However, the reality is that materials subject to tariffs are likely to face further price escalations.

Mitigating Cost Increases through Smart Planning

For project control managers and cost engineers, understanding how to manage these rising costs is crucial. Engaging with construction experts to develop a robust procurement strategy and explore alternative materials could help mitigate the impact of rising tariffs. Adopting technologies such as prefabricated systems may also provide cost savings.

Broader Context: Shifts in Trade Policy and Construction

The fluctuating nature of U.S. trade policy necessitates ongoing adjustments within the construction industry. As highlighted in a report by Cushman & Wakefield, current tariff rates could lead to a 4.6% increase in total project costs. Keeping abreast of legislative changes affecting tariffs will be critical for managing future expenses.

The Path Ahead: Continued Challenges and Opportunities

As construction professionals prepare for 2026, awareness of the market dynamics at play is essential. The interplay between domestic production costs and tariff-enforced pricing will likely shape project planning and budgeting strategies for the foreseeable future. By actively monitoring these trends, professionals can better position their projects for success amidst ongoing challenges.

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