Impact of Tariffs on u.s. CRE Construction Costs
One Year Into Tariffs: What the Data Shows
A year has passed since the implementation of tariffs that affected materials and products, including many inputs to CRE construction. We wanted to quantify the potential implications to U.S. CRE construction resulting from materials price changes and shifts in domestic and foreign supply. While policy remains in flux, we estimate that current tariff rates (as of April 7, 2026) will result in an increase to construction materials costs by 6.0% relative to a 2024 baseline (before the new tariff regime), and total project costs are estimated to rise 3.0%. When tariff rates were at a peak in summer 2025, we estimated materials cost relative to 2024 would increase by 9.0%, so recent developments are encouraging but do not mitigate cost risk completely. Some, but not all, of tariff-related cost increases have impacted the CRE construction market. Further cost pressures are expected in the months ahead.
What considerations should developers, contractors, and end users of CRE be aware of as trade policy shifts and the construction industry evolves?
We answer some key questions in the interactive report:
What lies ahead?
Trade policy has amplified volatility, uncertainty and cost pressures within the CRE construction industry. Although tariff rates have marginally eased in recent months, further shifts in the policy environment are possible. The long-term outlook includes persistently restrictive trade policy, which will result in ongoing challenges for builders and users of CRE.
Tariffs have reset pricing at a higher baseline, creating underwriting headwinds with development pipelines thinning and activity concentrating among well-capitalized sponsors. Cost pass-through is ongoing, with contractors and end-users absorbing higher materials costs; while resilience has held, tenant sensitivity and demand risks remain in more constrained segments.
As Section 122 tariffs expire and import reviews progress, the market is settling into a potentially more predictable but structurally higher-cost environment, requiring recalibration of returns, underwriting, and feasibility thresholds.
Trade policy remains fluid. USMCA revisions are expected in 2026, which may provide greater clarity on North American trade, but uncertainty persists around trade policy more broadly such as with important trading partners such as China.
Ongoing monitoring of trade policy, import data, and material pricing isn’t optional, but essential for identifying when cost pressures shift from manageable to deal-breaking.
