Tariff Update: Construction Cost Impacts & Outlook | January 25, 2026

By Kenneth F. Wille, PE – President, KOW Building Consultants

Disclaimer: The content and data in this post are the property of Kenneth F. Wille and KOW Building Consultants. All insights are intended as an estimate and potential outcome only and should not be interpreted as a financial or cost prediction. Use at your own risk.

Recent Tariff Activity

Metal tariffs remain the dominant cost driver across the construction market. Steel and aluminum duties are effectively running as high as 50% on key trading partners, translating into approximately 6–12% cost pressure on structural steel, rebar, façades, and equipment-heavy scopes.

Canada and Mexico continue to benefit from USMCA exemptions for compliant goods. However, non-compliant imports are now facing 25–35% tariffs, pushing suppliers to reprice materials and adjust sourcing strategies.

Where We Are Now

Overall construction cost escalation remains in the 4–6% annual range, with tariff-exposed trades exceeding that band.

This past week saw tariffs for Great Britain and select trading partners move from 0% to 10% (with a scheduled increase to 25% on June 1, 2026) before reverting back to 0%, highlighting the volatility and uncertainty surrounding trade policy.

Key year-over-year cost movements include:

• Steel: +15–25%

• Aluminum: +8–10%

• Concrete: +8–12%, driven primarily by labor and rebar costs rather than cement

Lumber pricing remains relatively stable compared to last year, though episodic 10–20% spikes remain possible due to ongoing mill capacity discipline.

What’s Next

Several upcoming milestones could materially impact construction pricing:

• Early-August tariff deadlines may reset baseline rates for dozens of countries, with metals remaining the most exposed category.

• The mid-August expiration of the China tariff framework is a major wildcard for fixtures, equipment, and MEP components.

• Any Supreme Court or executive action affecting Section 232 or IEEPA authority could quickly shift enforcement. Current pricing assumptions reflect tariffs largely remaining in place.

Stat of the Week

Steel-intensive scopes are now carrying an embedded tariff cost of approximately $15–$25 per square foot on mid-rise multifamily construction, depending on structural system selection and equipment mix.

Overall Volatility Rating

75 out of 100(1 = no volatility, 100 = most extreme)

This rating considers:

• Pricing instability, particularly for metals and equipment

• Contractors increasingly padding bids

• Sudden cost spikes

• The potential for rapid, unforeseen policy changes