In today’s construction news, learn about how President Donald Trump’s erratic trade policies have caused optimism in some sectors of the U.S. construction industry to decline. Sika, a manufacturer of construction chemicals (SIKA.S), launches a new tab. Thomas Hasler, the CEO, stated on Tuesday. On the other hand, both labor shortages and trade policy are putting pressure on the US construction industry.
Sika CEO Argues Trump Trade Policies Hurt US Construction Optimism
Original Source: US construction optimism hit by Trump trade policies, says Sika CEO
Sika (SIKA.S), opens new tab, building chemicals maker, said President Donald Trump’s uncertain trade policies have lowered construction industry optimism. On Tuesday, CEO Thomas Hasler said.
“We had a very strong start to the year and people were very optimistic about infrastructure investments and reshoring,” Hasler told Reuters after the Swiss company revealed first-quarter revenues on Tuesday.
He said Trump’s tariffs on Mexico and Canada caused anxiety among U.S. companies, changing the attitude.
Saying “Everything started to slow down,” Hasler. “Some of the projects have been pushed out, projects that were indicated to launch soon have been put on the backburner.”
He said construction, a local industry, was indirectly affected by the economy but not tariffs.
Sika, whose chemical additives strengthen and waterproof walls, floors, and roofs in commercial, industrial, and infrastructural projects, is a construction market indicator.
Sika’s main market, the US, was affected by Trump’s policies in the first quarter, as sales growth slowed.
Hasler said consumers wanted greater clarification before reshoring and adjusting supply networks.
However, Hasler claimed US infrastructure has proved “very resilient”.
He could not predict the uncertainty’s duration.
“The situation could change at any time,” stated. “Markets have become more unpredictable.”
Crosshairs on Construction
Original Source: Construction in the crosshairs: Downside risks via shifts in trade and immigration policy
Trade policy and labor shortages threaten US building. Construction resources including lumber, cement, and energy goods are primarily domestically made, but rising commodity prices and supply chain disruptions still affect the business. Trade disruptions are common in global commodities markets, where construction materials are exchanged.
Starting in 2025, the potential of tariffs on lumber, steel, and aluminum escalated input costs. Supply chains will remain complex as domestic producers cannot ramp up fast enough to fulfill demand; large exporters like Canada, the EU, and China will remain crucial.
Immigration policies substantially impact construction projects and wages. Construction has 25% immigrant workers, second only to agriculture.
This paper examines how tariffs have affected construction, how businesses responded, and what the latest tariffs mean for the industry. It also studies how immigration reduces residential and commercial building workforce shortages.
Present tariffs
Only 10% of construction costs are imported. Concrete, metal goods, petroleum, plastics, veneer, plywood, and engineered wood are the top construction materials by monetary value.
Single-family home builders utilize more wood than multifamily or business builders, who use more steel. Single-family dwellings account for two-thirds of annual housing production. Housing imports 7% of its inputs, compared to 10% of the construction industry.
Construction requires lumber, especially for single-family homes. Due to its simplicity of use, home builders favor Canadian lumber over Southern pine lumber for residential building, even though the US produces 90% of wood products. Builders are still significantly exposed to Canadian lumber despite recent reductions. Under the increased tariff regime, South production should increase, but not immediately.2
After the US put 20% national security tariffs on Canadian softwood timber in 2017, prices rose 80% within months. Profit margins were stretched for smaller home builders, few of whom survived the housing crash a decade earlier.
Wood cost multifamily developers $3,000 extra per apartment unit, delaying or scaling down certain projects. Affordable housing developments struggled to handle unanticipated cost rises, reducing low-income housing supply and affordability.
In 2024, the US imported 27% of steel5 and 47% of aluminum6 for building. Structural steel, rebar, aluminum windows, siding, and other metal components are essential. These input tariffs are old. Steel tariffs of 8-30% were established in 2002.
The tariffs were withdrawn three years later when research revealed higher steel prices cost more US jobs than they safeguarded. According to one estimates, the 2002 tariffs generated uncertainty, shortages, and project delays, costing 200,000 jobs in steel-using sectors (automotive, construction, machinery).
In March 2018, the US imposed 25% steel and 10% aluminum tariffs. In response, building input prices rose at the quickest rate in a decade, with the Producer Price Index (PPI) for all construction inputs up 9.3% in June 2018, the highest increase since 2008.8 Steel mill product prices rose 14% and aluminum mill shapes 8.5%. Tariffs are not included in the PPI; it underestimated their cost impact.
That episode squeezed profit margins for fixed-price contractors due to unexpectedly high material costs. Costs rose 8-9%, but the Associated General Contractors (AGC) found only 4% price increases, hurting profits and project delays.9
Tariffs temporarily benefited domestic industries that made tariffed commodities. Reduced import competition helped US steel and aluminum companies increase output and investment. By 2021, US crude steel production was 5% higher than pre-tariff levels in 2017; steel mill capacity utilization reached a 14-year high. This figure has dropped to 2016 levels, excluding the pandemic.10
The US International Trade Commission (USITC) calculated that the duties reduced downstream industries’ production by 0.6% and elevated their input costs by 0.2%.11
Major infrastructure projects were delayed due to builders’ inability to get enough American-made steel. Construction firms faced lengthier lead times, shortages, and the need to qualify new domestic suppliers for certain materials.
USITC determined that tariffs reduced downstream US output by $3.5 billion in 2021, indicating that the tariffs slowed construction growth even as they temporarily increased primary metal production.
Developers and renovators need appliances. Washing machine tariffs lasted from 2017 until 2023. Prices soared for not only washing machines, but dryers as well (which were not tariffed) since they were commonly marketed as a set.
According to the University of Chicago, roughly 2000 jobs were produced via the reshoring of washing machine manufacture. The cost of establishing those employment was $820,000 per job,12 raising the question of how we could have better targeted resources to help trade-displaced workers. Training, upskilling, and compensating trade-displaced people would have been cheaper.
Chinese-made residential construction materials are common. Starting in 2018, the US imposed wide tariffs on Chinese goods. In the third round of tariffs, 463 home building and remodeling products were subject to 10% to 25% levies.
The National Association of Home Builders (NAHB) estimated that at 25%, that list would cost US residential construction $2.5 billion annually.13 The items included flooring, cabinets, lighting fixtures, plumbing parts, HVAC equipment, nails, and saws.
Builders buy pickups and large trucks for construction. Most industry cars are built by US-based businesses using Mexican and Canadian parts.
USMCA replaced NAFTA in 2020. It strengthened auto origin rules. The Bureau of Economic Analysis says that domestic content has been 55–60% of US motor vehicle purchases by value in recent years.14
A 25% auto tax went into effect in April 2025, not exempting Mexico or Canada. One research shows this will raise pickup truck prices by $5000-$8500, before US port docking costs later this year.16
Contractors may postpone replacing old trucks, spend more on upkeep, or charge project owners more. Some may buy used cars domestically to avoid tariffs on new ones, raising prices. New and used car values typically fluctuate together. Price rises can raise maintenance and insurance costs. Tariffs can cascade across the economy and cause inflation.
Tariffs ahead
Construction risks increase with a more protectionist US in 2025. US trading partners Canada, the EU, and China have already retaliated for the administration’s April 2, 2025 tariffs. Copper and lumber tariffs are projected to rise. Few benefits come from the 90-day break.
Suppliers and producers are more likely to raise prices after the 2021 supply chain issues and rising inflation. This is already happening in commodity markets.
Even with 2018 tariffs, importers paid an average effective tariff rate of 3.5%. With the level and breadth of tariffs mentioned today, the fourth-quarter effective tariff rate might reach 30%, a record.
On April 9, the 90-day halt on “reciprocal” tariffs raised the effective tariff rate. The increase in Chinese import duties outweighed the reduction in other tariffs.
Current tariffs could cause a brief recession and stagflation. The latter was last seen in the 1970s. The Federal Reserve would have to wait longer to decrease rates and stimulate during a recession.
On April 4, Fed Chairman Jay Powell noted that excessive tariffs could accelerate inflation and hinder GDP and employment. The Fed must wait to observe if demand destruction stops tariff-induced inflation before cutting rates again.
Industry response
Some builders front-loaded inventory to arrive before tariff-effective dates, while others found suppliers in tariff-free nations. Retooling and recertification (such getting a new electrical component certified) were often required for such upgrades.
Many contractors inserted escalation provisions in contracts to pass through unexpected tariff-related cost increases.18 Material bids now last 15-30 days due to unpredictable prices.
Labor shortages, immigration policy changes
American construction workers are mostly foreign-born, therefore immigration flows and enforcement can cause labor shortages or surpluses, affecting wages and productivity. Nearly 25% of US construction workers are immigrants.19
About 40% of construction workers in Texas and California are foreign-born. This group performs vital contractor and laborer duties.
Before the epidemic, greater immigration enforcement and fewer immigrants restricted construction labor supply. Stricter immigration enforcement reduced homebuilding and raised house prices in affected areas.20
Carpentry, drywall, and roofing are common jobs for undocumented workers. Due to project delays caused by deportation laws, US-born skilled workers may be underemployed. Framing and roofing are interdependent, so if one isn’t done, the whole job stops.
With an aging, trained workforce and over 300,000 unfilled construction jobs in 2021-2022, the industry faced a labor shortage in 2020–2021. During the housing bust, many construction workers left. Many older workers retired and border restrictions hindered worker inflow during the pandemic.
The shortage raised construction wages and delayed projects owing to crew shortages. Many contractors lost output due to understaffing.
Net immigration reached pre-pandemic levels in 2022–2023. Construction saw the greatest number of immigrants in 15 years in 2022, with 130,000 new workers. With 3 million immigrant construction workers by 2023, the foreign-born share reached a record 25.5%.
Rising immigration cooled the overheated labor market and dampened wage growth in late 2023, according to a Federal Reserve analysis.22 When labor supply is tight, salaries rise, especially for lower-skilled jobs. Immigrant workers’ revival slowed inflation-causing wage growth.
The median age of a construction worker is 42, one year older than the median worker in the general workforce.23 To meet demand, the US needs to add 740,000 construction workers per year for the next few years, including replacing retirees and providing for new growth.
Younger Americans are less interested in construction. 16.8% of construction workers are Gen Z, the youngest generation.24
Immigration restrictions could increase the labor shortage, causing project delays, higher labor costs, and building sector growth slowdowns. Strong immigration can reduce labor shortages, keep projects on schedule, and control labor cost inflation, enhancing industry productivity and production.
Summary of today’s construction news
In summary, the state of the economy indirectly, rather than directly, impacted the local construction industry through tariffs. Sika is considered an indicator for the larger construction market because of its chemical additives, which are used to reinforce and waterproof walls, floors, and roofs in commercial, industrial, and infrastructural construction projects.
On the other hand, decision-makers are closely monitoring the cost, pace, and capacity of US construction due to the combined influence of trade and immigration policies. Global supply chains and commodity markets make the construction industry especially susceptible to tariffs.
