Contractors try to head off Trump administration tariffs

By Chuck Slothower

BridgeTower Media Newswires

A national organization of contractors said Wednesday that it’s working to head off tariffs threatened by the incoming Trump administration that the construction industry fears will add to construction costs and undermine a humming economy.

“Yes, we’ve been talking about it with the (Trump administration) transition teams. We’ve been talking about it with the people we know who have relationships with the (president-elect),” said Brian Turmail, spokesman for the Associated General Contractors of America. “We’ve been talking about it on Capitol Hill. And if anyone tells you they know what the (president-elect) is thinking, I would not buy real estate from them.”

AGC is also lobbying Trump associates to rescind President Biden’s rule requiring project labor agreements on major federal projects, and to limit contractors’ liability for chemicals known as PFAS.
“Bottom line is our members pay us to advocate for their interests, and that’s exactly what we’re doing,” Turmail said.

Contractors depend on softwood lumber from Canada, wastewater treatment machinery from Europe and labor from south of the border. Trump’s threats to enact 25 percent tariffs on goods from Canada and Mexico, and 10 percent on other nations, have raised alarm in the construction industry.

“Nearly all economists, at least those who aren’t joining this administration, would say yes, that tariffs — particularly ones as steep as 25 percent on our biggest trading partners — are very damaging to our own economy,” said Ken Simonson, AGC’s chief economist. “They’re going to drive up prices, not just on the imported items themselves, but I think contractors here would confirm that they saw prices rise from domestic suppliers, also.”

Simonson added that tariffs could spark trade retaliation and drag down the economy.

“I am quite worried about both specific effects on construction costs and, frankly, disrupting supply chains, adding to those availability problems that are still showing up on some materials, but more broadly, damage to the overall economy,” he said.

The comments came during a video call on Wednesday to mark the release of AGC’s annual construction forecast.

Trump has argued that Americans are being taken advantage of by its trading partners, and tariffs will level the playing field.

One construction executive expressed hope that Trump won’t follow through with the tariffs.
“I’m hoping that some of that turns out to be a negotiating tactic rather than an occurrence,” said Rex Kirby, president of Verdex Construction in West Palm Beach, Florida.

Simonson countered that it’s not clear that the tariff threats are a bluff. “We do share that hope, but I think it’s very hard to tell at this point. We’re getting very mixed signals.”

The tariff worries come as contractors close the books on a broadly profitable year. AGC’s survey of about 1,100 contractors found they were generally optimistic about the economy and expected to grow.
Sixty-nine percent of respondents expected to grow headcount in 2025, compared to only 10 percent who anticipated a decline.

Data centers, water and sewer, power, transportation and health care were all cited as high-impact growth areas. Only two sectors — private office and retail — were expected to decline in project value, and fewer thought those sectors would decline than a year ago.

In the Midwest, contractors are “extremely, extremely busy,” said Andrew Heitmann, a Turner Construction executive based in Kansas City, Missouri.

A $4 billion Panasonic battery plant in De Soto, Kansas, and preparations for the 2026 World Cup are adding to bustling work in data centers, infrastructure, health care, power, government projects and hospitality, Heitmann said.

“We do have a lot of labor pressure, not only for the frontline trade worker but for the professional staff,” Heitmann said.

The survey included 227 Midwestern respondents. They reported:

• 66 percent expect to increase headcount. Only 11 percent expect to decrease employees.
• 48 percent reported no significant supply chain problems. Another 44 percent said they had accelerated materials purchases after winning contracts.
• 59 percent said rising direct labor costs were a top concern, and 58 percent complained of an insufficient supply of workers or subcontractors.

In Wisconsin, 21 contractors responded. An even larger share, 81 percent, said they expect to increase headcount in 2025.