June 23, 2025, Update on Tariffs and U.S. Construction Costs

KOW Building Consultants
Jun 23
3 min read

As of June 23, 2025

Prepared by KOW Building Consultants | Use this data at your own risk

📈 Overall Concern Level: High

Due to escalating geopolitical tensions, evolving trade agreements, and newly imposed tariffs, construction cost uncertainty remains high across the United States. This week’s update highlights the key developments driving material prices and outlines what construction lenders, developers, and contractors should monitor next.

🧱 2025 Tariff Impact on U.S. Construction Costs

Building Type	Estimated Cost Increase	Change from Last Week
Wood-Framed	3% – 5%	0%
Poured-in-Place Concrete	5% – 8%	0%
Structural Steel	8% – 12%	0%

These cost projections are based on our proprietary tariff impact model, which calculates construction pricing trends using current U.S. duty schedules, material origin data, and real-time commodity inputs. Key assumptions include:

Stable freight rates (pre-Gulf conflict)
Typical import volumes by sector
Country-specific risk adjustments

🌍 Major Tariff Developments (Updated)

Region/Country	Tariff Status	Notes
European Union	50% (Delayed)	Decision expected by July 9, 2025; applies to autos and industrials.
Steel & Aluminum	50%	Applies to all global imports; major cost driver for structural systems.
Universal Tariff	10%	Blanket rate for all imports except Canada and Mexico.
Canada	25% on select goods	Excludes USMCA-covered goods; Canadian lumber taxed separately.
China	55% blended rate	Combines Section 301, fentanyl sanctions, and trade reciprocity duties.
Japan	Pending (24%)	Auto tariff negotiations ongoing; outcome expected Q3 2025.
Mexico	25%	Broad-based tariffs impacting raw materials and manufactured goods.
Canadian Lumber	14.5% (Ongoing)	Under a long-standing softwood lumber dispute.

Key update: China has resumed exports of critical rare earth minerals and magnet materials, which are essential to construction-related tools, wind turbines, EVs, and defense infrastructure. However, bans remain in place for materials tied to direct military applications.

⚠️ Geopolitical Risk: Iran Conflict & Oil Price Surge

Recent developments may dramatically affect construction fuel and logistics costs:

A U.S.-led coalition strike inside Iran was confirmed over the weekend.
Iran has threatened retaliation, including the possible closure of the Strait of Hormuz, a chokepoint for ~20% of global oil shipments.
Early impacts already visible:
- Crude oil futures up ~7% in early Monday trading
- U.S. gasoline prices may rise 15–30¢ per gallon in July
- Expect spikes in diesel fuel surcharges, delivery fees, and equipment operation costs

These changes will directly affect remote job sites, heavy equipment fueling, and material delivery timelines.

📊 Inflation & Input Pricing Trends

The Producer Price Index (PPI) for construction inputs rose 0.4% in May 2025, driven primarily by tariff-linked expectations and early signs of fuel inflation.
Diesel fuel surcharges are forecast to rise 6–10% over the next 4–6 weeks, especially if oil exceeds $100/barrel.

🔍 What We’re Monitoring Next

EU Tariff Decision (July 9) – Will influence short-term steel and industrial material pricing
Strait of Hormuz Developments – A prolonged conflict could push oil well over $100/barrel
Freight & Logistics Surcharges – Especially impactful for rural and remote construction
Domestic Producer Response – Watch for output shifts in U.S. steel, concrete, and lumber
China Tariff Enforcement – Focused on solar panels, high-tech components, and prefab systems

For construction lenders and developers, this week reinforces the importance of supply chain flexibility, tariff clause reviews, and active project risk monitoring. We’ll continue tracking how these global developments impact domestic construction pricing, project timelines, and draw schedule reviews.

📩 To receive these updates directly in your inbox or schedule a custom cost risk briefing, contact us at lucasg@kowbc.com or visit www.kowbc.com/blog