Association Warns New Tariffs Will Further Inflate Construction Costs, Disrupt Supply Chains, and Undermine Project Delivery, and Urges Caution
The price of materials and services used in nonresidential construction rose 0.4 percent in March, the third monthly increase in a row, according to an analysis by the Associated General Contractors of America of government data released today. Association officials noted that the flurry of tariff-related announcements in recent weeks has been contributing to a series of announced price hikes from a range of materials suppliers.
“Lumber and metals prices shot up in March, while contractors’ inboxes are bulging with ‘Dear Valued Customer’ letters announcing further increases for many products,” said Ken Simonson, the association’s chief economist. “Rapid-fire changes in tariffs threaten to drive prices higher for many essential construction goods.”
The producer price index for inputs to new nonresidential construction—a weighted average of all materials and certain services used in new construction—rose by0.4 percent in March, following increases of 0.6 percent in February and 0.8 percent in January. That was the first time since September 2023 that input prices had risen for three consecutive months, and it followed more than a year of stable or falling prices, Simonson said.
Metals and lumber prices were the major contributors to the increase in March. The index for steel mill products soared 7.1 percent in March. Aluminum mill shapes jumped 5.1 percent in price for the month and the index for lumber and plywood rose 2.7 percent.
Prices used to calculate the indexes were collected around March 11, Simonson noted. Since then, the administration has imposed new tariffs of 25 percent on steel and aluminum imports, 25 percent on many goods from Mexico and Canada, 145 percent on imports from China, and 10 percent on most other countries. Additional tariffs on copper and lumber are under review and much higher tariffs on many countries were imposed on April 9 but then suspended for 90 days.
Association officials noted that new and planned tariffs will not only increase costs for many construction materials, but are likely to lead to higher costs for many private and public sector construction projects. They urged the Trump administration to consider delaying imposing new tariffs until there was greater market certainty about the impacts of those that have already been put in place.
“Our members are trying to deliver the best value for the public and private sector clients they serve,” said Jeffrey Shoaf, the chief executive officer of the Associated General Contractors of America. “But it is hard to deliver that best value when you have no idea how much you are going to have to pay for many of the materials required to build projects.”
View producer price index data.