The Tariff Floor Is Moving. Here’s What Matters.

The tariff conversation in construction has mostly been reactive. A rate goes up, costs move, owners ask questions after the fact. What is unfolding right now is different. The administration is not oscillating on tariffs. Instead, it is rebuilding the legal architecture to make tariffs more durable. For construction budgets, that distinction matters more than any single rate announcement.

What happened after the Supreme Court struck down the IEEPA tariffs in February?

The administration moved fast. Within three weeks of the February ruling, USTR initiated 60 parallel Section 301 investigations into trading partners' failure to prohibit imports of goods produced with forced labor. A temporary 10% global tariff under Section 122 went into effect as a stopgap. Section 122 has a hard 150-day cap, expires around July 24, and was never intended to be permanent.

Section 301 currently appears to be the administration's primary replacement mechanism. Congress delegated that authority to USTR through the Trade Act of 1974. USTR investigates, conducts public comment and hearing processes, makes a determination, and tariffs go into effect by executive action. No congressional vote is required, and there is no 150-day clock. Once finalized, Section 301 tariffs can remain in place indefinitely. The first Trump administration's China tariffs were litigated extensively and largely upheld, making Section 301 one of the most tested tariff authorities available to the executive branch. One caveat: the Supreme Court is currently reviewing whether USTR adequately addressed public comments in a case arising from those same China 301 tariffs, and the outcome could introduce new procedural constraints on 301 authority. That case is pending and unresolved, but it is worth watching.

What did USTR find in the 301 investigations?

On June 2, USTR announced determinations in all 60 investigations. USTR determined that each investigated economy had either failed to impose or failed to effectively enforce a prohibition on imports produced with forced labor. The proposed additional tariff is 10% for countries that have some form of forced labor import prohibition already in place, and 12.5% for all others. The 60 economies collectively account for 99.4% of all goods imported into the United States. The public comment period closed July 6. Hearings were held July 7. The administration has indicated it intends to complete the process before the July 24 expiration of the Section 122 surcharge.

How does this interact with existing tariffs on construction materials?

This is where the construction budget exposure gets specific. The proposed Section 301 tariffs would explicitly not stack with Section 232 tariffs. Steel and aluminum products covered by the current Section 232 program are carved out of the proposed Section 301 action. For everything outside that bracket, the default rule under trade law is that tariffs stack, and USTR has proposed no exemption for non-232 materials. While tariff stacking is generally the default treatment absent an exemption, CBP implementation instructions and the final USTR action will ultimately determine how overlapping duties are assessed on specific products. Several trade-law analyses have highlighted this possibility. The final action has not been issued, so the stacking treatment on non-232 categories remains subject to modification and the default rule applies unless USTR affirmatively creates an exemption.

For MEP equipment, controls, specialty materials, and general imported building products, the working assumption should be that the Section 301 rate applies on top of existing duties, with one massive geographical exception: USMCA-compliant goods from Canada and Mexico are explicitly exempt under the proposed rule. For supply chains anchored in Europe or Asia, however, the stacking exposure remains a live threat. Brazil carries additional exposure. USTR has proposed a separate 25% Section 301 tariff tied to a distinct investigation into digital trade and intellectual property practices. That tariff has been structured to stack on top of the 12.5% forced labor tariff per the proposed rule, for a cumulative proposed rate of 37.5% before any existing duties, though final confirmation awaits USTR's final action.

What are the other near-term dates that matter?

Three dates remain active.

First, July 24 is the Section 122 expiration. If the Section 301 forced labor tariffs are finalized before that date, which is the stated intent, the transition happens without a gap. If finalization slips, there is a window of uncertainty on the baseline rate.

Second, August 1. The administration sent letters to 25 trading partners this month telling them to expect higher tariffs starting August 1 unless bilateral agreements are reached. The EU, Canada, and Mexico are on the list. For construction materials sourced from affected countries, August 1 could introduce an additional tariff layer, though the interaction with other tariff programs remains uncertain.

Third, semiconductor tariffs. Commerce Secretary Lutnick indicated recently that an announcement is coming within weeks. Rate and product scope are not yet public. For traditional building sectors the effect may be limited. For data centers, advanced manufacturing, semiconductor facilities, life sciences, healthcare, and other MEP-intensive projects, the exposure could be more meaningful depending on scope.

What does the tariff stack look like by material category?

The table shows that total landed cost exposure is not one number. It depends on material type, country of origin, and which exemptions survive the final action. Steel and aluminum products covered by the current Section 232 program carry the highest existing rates but are explicitly carved out of the proposed Section 301 layer. Everything else carries stacking exposure that is unresolved until the final action is published.

What should we be doing right now?

The procurement question is more urgent than the policy question. While the administration's preferred legal pathway is now clearer, the final scope, rates, and implementation details remain subject to completion of the Section 301 process and any subsequent litigation.

The administration appears to be following the traditional Section 301 process, including investigations, public comments, hearings, and formal determinations, which generally provides a stronger legal foundation than the authorities recently struck down by the courts. The tariff floor increasingly appears structural rather than temporary.

The immediate exposure is often greater in equipment procurement than in commodities. Electrical gear, controls, HVAC equipment, specialty manufactured products, and technology-enabled building systems are generally more vulnerable to new tariff layers than structural steel and aluminum, which already operate within an established Section 232 framework.

For active projects, the immediate task is identifying which material categories remain unprocured and where they are being sourced. For contractors carrying open bids, the same inventory applies. Contingency held against tariff exposure has not outlived its purpose.

The next update will cover the final Section 301 action when it is published. If final action arrives before July 24, as the administration intends, attention will quickly shift from tariff rates to tariff stacking. For construction buyers, that distinction matters because the tariff floor increasingly appears structural rather than temporary.