One Year Later: Did the Tariffs Actually Bite?

Metals, Construction Costs, and What the Data Actually Shows

A year ago, the construction industry was running escalation scenarios and stress-testing contingencies against a tariff framework nobody fully understood. The numbers are in now. Some fears were overblown; some weren't. And a few risks that didn't make the original list are the ones that should be keeping us up at night heading into summer.

What happened a year ago, and what's happened since?

This wasn't a single tariff event. It was a fourteen-month escalation ladder. In February 2025, the Trump administration expanded Section 232 tariffs on steel and aluminum, eliminating most prior exemptions. By June 2025, rates had risen to 50% on core metal imports. In July 2025, copper was added at the same rate. Then, on April 2, 2026, the framework was restructured again: commodity metals stay at 50%, while derivative products tier down to 25% or 15% depending on metal content and country of origin. The policy is still being adjusted.

What was the industry bracing for?

The fear in early 2025 was straightforward. Steel and aluminum are used in virtually every structural and mechanical system in a building. An initially anticipated 25% tariff threatened to push structural steel costs up 8–12%, with downstream pressure on MEP, curtainwall, roofing, and RF shielding. Procurement teams scrambled to buy forward. GMP pricing structures carried embedded escalation allowances. Preconstruction professionals were asked daily how much contingency was enough.

What actually happened to construction costs?

It bit. Construction input prices surged at a 12.6% annualized rate in early 2026, the fastest pace since 2022. At the intermediate level, the BLS reports components and materials for construction up 5.4% year-over-year through March, with processed goods for intermediate demand up 6.6%, the largest 12-month advance since November 2022.  The aggregate direction was unambiguous. The distribution was not.

The picture widens when finish materials are included. The Liberation Day IEEPA tariffs were imposed in April 2025 and lived for roughly ten months before the Supreme Court struck them down in February 2026. These hit a different layer of the material stack entirely. Light fixtures, luxury vinyl plank, ceramic tile, cabinet hardware, and millwork components with heavy Asian manufacturing exposure all absorbed meaningful cost pressure during that window. Unlike Section 232, which targets commodity metals at the raw material level, IEEPA tariffs landed at the finished goods level which meant less opportunity for substitution and faster pass-through to bid pricing. Contracts executed during mid-2025 carry that cost basis regardless of what happened in February.

The question of refunds now adds its own complexity. The government estimates $166 billion in unconstitutional IEEPA tariffs is now in processing, but suppliers who passed costs through to contractors, and contractors who passed them to owners, are under no automatic obligation to return them. For projects still operating under a 2025 fixed-price structure, that is a question for your legal team. Is there any mechanism for downward adjustment that could capture a refund flowing back through the supply chain?

Why didn't everything go up equally?

Three forces pushed back. Domestic steel production increased, buffering some import-dependent pricing pressure. Residential demand softened. Brookings estimates tariffs added roughly $17,500 per new home, pulling commodity demand down with it. Import rerouting allowed some buyers to navigate headline rates through sourcing substitution. The result: escalation was real but differential. Structural steel and copper-intensive MEP scopes felt it hardest. Some fabricated components saw less pass-through than feared. Blended escalation rates missed all of it.

Where do supply chains stand today?

The Construction Supply Chain Index (CSCI) is a proprietary three-layer diffusion index that I developed. Above 50 indicates stress, below 50 indicates ease. The layers are designed to capture leading, coincident, and lagging signals simultaneously, which means divergence between layers is often more actionable than the composite reading alone. Layer 1 tracks freight and logistics conditions which is a leading indicator with a 30 to 90 day lead on procurement disruption. Layer 2 tracks global supply chain stress across 27,000 businesses worldwide, a coincident indicator of current manufacturing and sourcing conditions. Layer 3 measures actual lead time deviation from pre-pandemic baselines across over 160 construction materials and products, weighted by cost share and schedule criticality. This is the only construction-specific component and is a lagging indicator by 6 to 12 months.

The composite registered 56.8 in January and has risen to 58.1 through April, trending away from normalization. Layer 1 is at 38.3, meaning freight and logistics are currently a tailwind. Layer 2 has tightened from 56.6 to 60.2, reflecting tariff-driven procurement acceleration that historically precedes rather than sustains supply chain stress. Layer 3 has edged to 66.9. Electrical infrastructure lead time deviations remain at elevated rates of 150% from pre-pandemic baselines with no near-term normalization anticipated. For pharma and life sciences projects, where electrical infrastructure density is high and schedule compression tolerance is low, that number lives in your procurement plan right now.

Shouldn't tariffs be easing lead times by reducing import volume?

It's a reasonable hypothesis. Less import activity should mean less port congestion, less logistics pressure, and if project cancellations follow cost increases, demand destruction should soften procurement timelines. The intuition is sound. The mechanism isn't playing out that way.

Buyers anticipating further tariff increases are pulling orders forward. This is exactly what the Layer 2 rise to 60.2 is capturing. That concentrated demand surge hits supplier capacity all at once, swamping whatever relief reduced import volume provides. Domestic capacity can't absorb the volume shift on a short timeline. New steel and aluminum production takes years to commission, and the gap between import constraint and domestic ramp-up is where lead times live. What makes this worse is that the domestic supply base entering this cycle was already leaner than pre-pandemic. Smaller fabricators and distributors that exited during the 2023-2024 cost volatility period never came back, which means the remaining supply base hits capacity ceilings faster when demand accelerates. There is no routing around a disrupted supplier in pharmaceutical, healthcare, and life sciences construction where specifications are locked to specific manufacturers and substitution isn't an option. When your switchgear manufacturer has an 18-month lead time, a 50% tariff on a foreign alternative doesn't open a door. It closes one.

The precise claim isn't that tariffs extend lead times directly. It's that tariff-driven procurement acceleration creates demand surges that a consolidating domestic supply base, in a spec-constrained market, isn't positioned to absorb. Layer 3 at 66.9 is the evidence.

What do we do with this?

Three things.

• Stop using blended escalation rates. Scope-level modeling is no longer optional when structural steel and drywall are running in opposite directions.
• Revisit escalation clause language before executing any fixed-price structure. Index to BLS PPI series at the scope level, not CPI.
• Treat lead time as a cost variable. At Layer 3 of 66.9, late procurement decisions are converting into schedule risk and schedule risk converts into carrying costs. Early packaging of long-lead scopes is one of the highest-ROI preconstruction decisions available right now.

What is worth watching through Q3?

The April tariff restructuring locked the 50% commodity metal rate through at least December 2027. That pressure isn't going away.

The more immediate watch item is July 24, 2026. After the Supreme Court struck down IEEPA tariffs in February, the administration replaced the broader reciprocal framework with a 10% global baseline under Section 122 of the Trade Act of 1974. This is an emergency authority with a statutory 150-day cap. That clock expires July 24. The likely successor is Section 301, but that mechanism requires a formal Commerce investigation and public comment process before tariffs can take effect. There is no clean automatic handoff. That gap lands squarely in summer procurement season for projects breaking ground in 2027.

Watch copper. Watch the Section 122 clock. Watch CSCI Layer 3. When it compresses back toward 55, the supply chain has digested the tariff shock rather than deferred it. At 66.9 and rising, we are not there.