New York Construction Report staff writer
Construction material costs accelerated in August as new tariffs fueled steep price hikes for steel, aluminum and lumber, according to an analysis of government data by the Associated General Contractors (AGC) of America.
The producer price index for goods and services used in nonresidential construction rose 0.2% in August and 2.5% from a year earlier. Association officials said higher tariffs are forcing contractors to delay, cancel or scale back projects.
“The huge increases in steel and aluminum tariffs appear to have enabled domestic producers to push up their selling prices,” said Ken Simonson, the association’s chief economist. He said a recent AGC-NCCER survey found 43% of contractors had at least one project canceled, postponed or downsized in the past six months because of higher costs.
Tariffs on steel and aluminum were raised to 50% on June 4, following an earlier increase to 25% in March. A 50% tariff on copper products took effect Aug. 1. Broader duties on most imported construction materials also began in early August, making additional price increases likely.
Aluminum, steel and lumber were among the biggest contributors to the cost surge. The producer price index for aluminum mill shapes jumped 5.5% in August and 22.8% over 12 months. Steel mill products rose 1.5% for the month and 13.1% from last year. Lumber and plywood increased 0.5% in August and 4.8% annually.
Two in five contractors reported raising their own prices to offset tariffs, while 16% said they absorbed the costs or shared them with suppliers, the survey found. Nearly 40% expect materials prices to climb further in the coming months.
“There is a limit to how many price increases the market can absorb before owners put projects on hold,” said Jeffrey D. Shoaf, AGC’s chief executive officer. “The more the administration does to resolve trade disputes, provide certainty and lower punitive tariff levels, the more demand for construction should rebound.”
View producer price index data. View the AGC of America-NCCER survey.
