Weekly Update on Tariffs and U.S. Construction CostsAs of July 1, 2025

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

Overall Concern Level: High

Due to persistent geopolitical tensions (Iran conflict), unresolved EU tariffs, and rising oil prices, cost uncertainty remains elevated in the U.S. construction sector.

Construction Cost Impacts from 2025 Tariffs:

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 estimates are derived from a proprietary tariff impact spreadsheet incorporating current duty schedules and average material input values by country of origin. Key assumptions include stable freight costs (pre-Gulf escalation), and current volumes of trade with affected countries.  Early signals of upward pressure on transportation and fuel-linked inputs are emerging, mainly driven by the oil market.

Significant Tariff Developments:

Region/Country	Tariff Status	Notes
European Union	50% (Delayed)	Implementation paused; decision expected by July 9, 2025.
Steel & Aluminum	50%	Applies to global imports; major cost driver for structural projects.
Universal Tariff	10%	Blanket tariff on all imports excluding Canada and Mexico.
Canada	25% on select goods	Excludes USMCA-covered items; Canadian lumber still taxed separately.
China	55% blended rate	Includes Section 301, fentanyl-linked sanctions, and reciprocity duties.
Japan	Pending (24%)	Japan lobbying to avoid auto tariffs; outcome expected Q3 2025.
Mexico	25%	Broad-based, affects raw goods, parts, and manufactured items.
Canadian Lumber	14.5% (ongoing)	Softwood lumber duties under pre-existing dispute.

China has resumed shipments of critical rare earths and magnet materials to the U.S. following recent talks. These components are crucial in EVs, wind turbines, defense systems, and construction tools. However, bans remain in place for materials linked to direct military use.

Geopolitical Impact to Watch

• Iran: After last weekend’s strikes, Iran threatened to disrupt the Strait of Hormuz. By Friday, small attacks on regional shipping were reported (no U.S. vessels hit). Insurance premiums on Persian Gulf shipping routes jumped ~20% this past week.

• Oil prices: Brent crude rose from ~$81/barrel to ~$86/barrel, a ~6% gain.  U.S. diesel futures increased ~4%, signaling coming fuel surcharge hikes.

• China: No new tariff announcements, but increased inspections on rare earths exported for Western tech and infrastructure.

Inflation Watch:The PPI flash estimate for June shows a +0.3% month-over-month rise in construction inputs, continuing the tariff-linked climb.  Expect freight fuel surcharges to start showing up on concrete and lumber deliveries by mid-July, adding ~1–2% on delivered costs for remote sites.

What I’m Monitoring Next

• EU Tariff Vote Prep: Companies may start bulk ordering steel/aluminum ahead of formal implementation, tightening spot supply.

• U.S. Gulf Ports: More ships may reroute or face delays from insurance or navy escort requirements, slowing imported building components.

• Lumber Imports: No new Canadian decisions yet — but if oil spikes, Canadian softwood becomes relatively more attractive again despite the 14.5% tariff.

• Factor in slightly longer lead times for materials sourced via Gulf routes (tile, fixtures, electrical).

• Start contingency planning for +1–3% freight surcharges on delivered goods by end of July.

• Continue closely monitoring the EU ruling and Persian Gulf situation, which together could swing structural steel pricing by 5–10% over the summer.

As always, thanks for reading!