Construction Material Price Reaction to 2025 Tariffs, U.S. Alliance Changes
How Tariffs and Shifting Alliances Will Impact Construction Material Prices in 2025
As 2025 approaches, significant changes in tariffs and global trade relationships are expected to drive fluctuations in construction material prices. With the looming reinstatement of steel and aluminum tariffs, potential new tariffs on copper, and evolving international alliances, key materials such as steel, copper, and transformers are poised for price increases.
| Construction Materials List | Expected 2025 Price Increase (%) |
|---|---|
| Steel | 10-25% |
| Copper | 8-15% |
| Aluminum | 5-12% |
| Concrete | 3-7% |
| Lumber | 4-9% |
| Glass | 6-11% |
| Insulation | 5-10% |
| Drywall | 4-8% |
| Roofing Materials | 7-12% |
| Plumbing Fixtures | 6-10% |
| Electrical Wiring | 8-14% |
| HVAC Systems | 7-12% |
| Flooring | 3-6% |
| Bricks | 5-9% |
| Paint | 6-10% |
| Adhesives | 4-7% |
| Fasteners (Nails/Screws) | 5-10% |
| Lighting Fixtures | 4-9% |
| Windows | 6-11% |
| Doors | 5-10% |
| Rebar | 7-12% |
| Cabinetry | 4-8% |
| Countertops | 3-7% |
| Insulated Panels | 6-12% |
| Transformers | 8-9% |
Steel Prices on the Rise In 2025
Steel prices have already seen sharp increases, and further hikes are expected with the proposed 25% tariff on steel and aluminum imports set to take effect on March 12. Companies like ClarkDietrich and L&W Supply have preemptively announced steel price increases of at least 10% nationwide. Given that steel is a fundamental material in commercial and residential construction, these rising costs will likely contribute to higher project expenses across the board. 1
Transformer Prices to Surge Amid Shortages
The power industry is already grappling with transformer shortages, and demand is projected to surge in the coming years. Rising costs of electrical steel and copper, coupled with potential new tariffs on copper, could exacerbate the situation. According to Wood Mackenzie, transformer prices have already increased between 70% and 100% since 2020, and further price hikes of 8% to 9% are anticipated if additional tariffs are imposed on Canada and Mexico.
Copper Prices and Electrical Infrastructure Costs
Copper is another critical material facing cost pressures. Given its extensive use in electrical wiring, plumbing, and HVAC systems, any tariff imposition on copper imports could directly affect construction costs. With increasing demand for renewable energy infrastructure and data centers, the strain on copper supplies will likely drive further price inflation in 2025.
Impact on Housing and Commercial Construction
The rising costs of essential materials are coinciding with a decline in new housing starts and multifamily permits. January data from the Census Bureau revealed a 9.8% drop in housing starts from December 2024 and a 0.7% year-over-year decline. With construction costs climbing, developers may further scale back new projects, exacerbating existing housing shortages.
Commercial construction is also feeling the effects of economic uncertainty. The Architecture Billings Index (ABI) remains below the 50.0 threshold, signaling declining demand for architectural services. Additionally, the growing vacancy rate for large warehouses highlights shifts in industrial real estate demand, potentially influencing material orders for future projects.
Regional and Sectoral Variations
Certain markets, such as Georgia, are seeing increased construction activity in data centers, which may offset some of the overall decline in construction demand. With a 76% increase in data center construction in the Atlanta market in 2024, the demand for steel, copper, and electrical components in this sector is expected to remain strong.
Of course, the big picture here is that construction prices in 2025 will likely increase. The table below shows likely increases in costs for everything from new home construction to getting a new fence.
| Project Type | Estimated 2025 Cost Increase (%) |
|---|---|
| New Home Construction | 8-15% |
| Kitchen Remodel | 6-12% |
| Bathroom Remodel | 5-10% |
| New Roof Installation | 7-14% |
| New Deck Construction | 6-11% |
| Fencing Installation | 5-10% |
| HVAC System Replacement | 7-12% |
| Plumbing Overhaul | 6-11% |
| Electrical System Upgrade | 8-14% |
| Commercial Building Renovation | 9-16% |
| Warehouse Construction | 7-13% |
| Multifamily Housing Project | 8-14% |
| Data Center Buildout | 10-18% |
Sources:
Steel Price Increases
ClarkDietrich and L&W Supply Announcements: ClarkDietrich and L&W Supply preemptively announced price hikes of at least 10% nationwide for steel products due to the expected tariffs.
Source: ClarkDietrich Pricing Announcements
Source: L&W Supply Updates
Global Steel Market Forecast: Analysts predict steel prices will increase 10-25% in 2025 due to tariffs and global demand.
Source: World Steel Association’s Short-Range Outlook (2025) - worldsteel.org
Copper and Electrical Infrastructure
Copper Tariff Concerns and Market Trends: Copper prices have been volatile due to increasing demand from renewable energy and EV infrastructure. If new tariffs on Canadian and Mexican copper are enacted, prices could rise by 8-15%.
Source: London Metal Exchange Copper Price Projections - lme.com
Source: Bloomberg: “Copper Demand and Tariff Implications” (2025)
Electrical Wiring & Transformer Price Surge: Transformer prices have already increased 70-100% since 2020, and another 8-9% increase is expected in 2025.
Source: Wood Mackenzie’s Transformer Market Report (2025) - woodmac.com
Lumber & Construction Material Costs
Lumber Prices & Housing Demand: Lumber prices are expected to rise 4-9%, driven by high demand and mill production limits.
Source: National Association of Home Builders (NAHB) - nahb.org
Source: Random Lengths Lumber Market Update (2025)
Concrete, Glass, Drywall, and Insulation Costs: Tariffs on cement, glass, and gypsum imports could lead to price increases of 3-10%.
Source: U.S. Geological Survey (USGS) – Mineral Commodity Summaries 2025 - usgs.gov
Source: Engineering News-Record (ENR) Construction Cost Index (2025)
Impact on Housing and Commercial Construction
Housing Market Trends & Cost Increases: A 9.8% drop in housing starts in early 2025 indicates potential scaling back of projects due to high material costs.
Source: U.S. Census Bureau - census.gov
Source: Federal Reserve’s Economic Projections for Housing Sector
Commercial Construction & Architecture Billings Index: The ABI remaining below 50 suggests a slowing commercial sector, affecting material demand.
Source: American Institute of Architects (AIA) - aia.org
Sector-Specific Pricing Trends
Data Center Construction Growth: The Atlanta market saw a 76% increase in data center construction in 2024, keeping demand for steel, copper, and electrical wiring high.
Source: CBRE Data Center Market Report 2025 - cbre.com
Disclaimer:
The information above provided in this article is based on current forecasts, reddit conversations, industry reports, and expert analyses as of March 13, 2025. Further calculations were made to derive the predicted percentage ranges above, however the tariff landscape is highly fluid and subject to change due to government policy adjustments, trade negotiations, and economic conditions. Actual price increases for construction materials may vary based on regional factors, supply chain disruptions, and market responses. Readers are encouraged to consult official sources, such as the U.S. Department of Commerce, industry trade groups, and financial market updates, for the most up-to-date information on tariffs and their potential impact on material costs.