Rarely has the minutia of global trade policy gotten as much attention as it is enjoying today. According to Google Trends, searches for the term “tariff” increased considerably since 2020.¹

What is a tariff? 

A tariff is a government-imposed tax on imported goods. The intended end result makes foreign products more expensive, encouraging consumers and businesses to buy from domestic producers.

The U.S. has a long history of using tariffs, starting all the way back in 1789. During President Trump’s first term in office, he introduced several new tariffs, including a 15% tariff on solar panels, a 25% tariff on steel (with many exemptions built in), and a 10% tariff on aluminum. While these tariffs have largely remained in place since then, several new tariffs have been proposed this year.

What’s been proposed this year

• 25% on steel and aluminum
• 25% on autos and parts
• 25% on Canada and Mexico for non-USMCA goods
• 145% on goods from China
• 10% on goods from every other country except Russia, Belarus, Cuba, and North Korea

These tariffs levied against over 60 countries have been paused for the next three months. In that time, the administration has pledged to negotiate new trade deals in an effort they are calling “90 deals in 90 days.”

How tariffs impact construction

Tariffs generally increase costs across the supply chain. The impact of these import taxes is significant, and it is supposed to be. For tariffs to actually encourage foreign companies to move their manufacturing to the U.S., the added costs from those tariffs would have to be big enough to outweigh the expense of relocating operations — something that rarely happens quickly or easily.

Here’s how it works in reality: When a tariff is applied, it’s usually the U.S. importer — often a U.S.-based company — that pays it. They still buy the product from the foreign company, but now they also have to pay the U.S. government an extra tax on top of that. The importer has to decide: Do they absorb that cost themselves or do they pass it on to customers by raising prices? Most of the time, that cost gets passed on, though some level of cost absorption does occur — either by the importer, the manufacturer, or both.

This added strain ripples through the supply chain. Importers pressure foreign suppliers to lower their prices, but not all manufacturers can absorb those extra costs. Some may go out of business, while others look to shift production to lower-cost countries, creating delays and uncertainty as supply chains are rerouted.

At the same time, prices for domestically produced goods often rise as well. Part of the reason is that many U.S.-made products still rely on imported parts.

Cost and schedule impact

As companies pivot sourcing to lessen the impact of tariffs, global supply chains shift — often not smoothly. The result: longer lead times, logistics bottlenecks, and volatile pricing.

JE Dunn’s internal estimates suggest that if new tariffs are fully implemented, project costs could increase between 3-5%. This estimate is based on a static analysis of past JE Dunn projects and material mixes along with import volumes and proportions for the affected goods.

JE Dunn has also been tracking the impact of tariffs on material pricing. The most frequently used materials, and their relative weights within the final cost, are identified using historical averages of actual projects.

Tariffs can support specific U.S. producers, especially those competing directly with low-cost imports. But for sectors like construction — where imported components are essential — the broader impact is inflationary. In some cases, U.S. manufacturers also face higher input costs, reducing their global competitiveness.

Impact of uncertainty

Even before any tariffs take effect, policy announcements alone can shake confidence. As trade measures are floated, debated, and revised, businesses struggle to plan ahead. That unpredictability can delay investment, disrupt timelines, and complicate bidding and procurement strategies. Bloomberg noted that “finance officers from Colorado, Illinois, Minnesota, Nevada, and Oregon said that the vague and changing goals of tariffs, as well as the abruptly shifting percentages and start dates, all are working to create turbulence that is affecting their economies… [and] small businesses, which are extraordinarily sensitive to price fluctuations and supply chains, are starting to delay hiring and expansion decisions.”³

Uncertainty has a chilling effect on spending and growth. Research from the Federal Reserve found that an increase in trade policy uncertainty decreases growth on a global scale and with damaging effects to all businesses.⁴ When businesses can’t reliably predict costs or demand, they are more reluctant to spend, hire, or innovate. Consumers respond in a similar way — big purchases are delayed, planning for future spends are halted, and overall consumer confidence is diminished. In the world of construction, it’s harder to show that a project will be profitable if cost varies this widely. As a result, prices will increase and demand for projects will dampen, particularly those that are more exposed to affected supply chains.

While tariffs can provide short-term benefits for specific domestic industries, their broader impact on construction and other sectors is often inflationary and disruptive. The resulting uncertainty and cost increases make long-term planning challenging, ultimately affecting project budgets, timelines, and growth potential across the industry.