‘Doesn’t bode well’: US commercial construction material prices rising with tariff plans
26 July 2025
The cost of materials used in non-residential construction ticked upward again in June, with analysts warning that newly announced tariffs could add further volatility to a market already showing signs of strain.
An illustration representing rising US construction material prices. (Image generated with AI)
Prices for key commercial inputs rose 0.2% compared to May and 2.3% year-on-year, according to a new analysis by the Associated General Contractors of America (AGC), marking the sharpest 12-month increase since February 2023.
“The fact that construction materials prices are rising even before the steepest proposed tariffs have taken effect doesn’t bode well for what will happen in August if the promised new tariffs are implemented,” said Ken Simonson, chief economist at AGC.
Steel, aluminium, and wood products led the annual increase. The producer price index for aluminium mill shapes jumped 6.3% compared to June 2024, while steel mill products rose 5.1% and lumber and wood products climbed 4.8%. Simonson said certain segments saw far steeper hikes, including a 22.5% increase for fabricated structural metal used in bridges and 8.3% for bar joists and rebar.
On June 4, the US raised tariffs on steel and aluminium imports to 50%, up from 25% earlier in the year. Trump has since announced a new 50% tariff on copper, scheduled to take effect 1 August, and has signalled broader import restrictions could follow.
Industry officials argue the resulting cost pressures may undercut the benefits of recent policy gains, including tax certainty and permitting reforms introduced under the One Big Beautiful Bill Act.
“The construction industry is poised to benefit from greater tax certainty as well as the administration’s efforts to streamline permitting and reduce needless regulatory burdens,” explained Jeffrey Shoaf, AGC’s chief executive officer. “Finding a way to provide greater certainty on materials prices is the best way to make sure the new tax and regulatory approach have the best possible impact on economic activity.”
AGC said inflationary pressure from materials could lead developers to pause or cancel projects, especially in private commercial sectors already facing economic headwinds.
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