--- title: "Tariffs & Rising Material Costs: What Contractors Must Know" description: Steel and aluminum tariffs are driving price hikes. Learn how to protect construction project margins with proactive planning and tax-smart strategies. image: https://www.baldwincpas.com/hubfs/tariffs.jpg --- 1 min read # Tariffs & Turbulence: Guarding 2025 Project Budgets from Material-Price Spikes [ Baldwin CPAs ](https://www.baldwincpas.com/insights/author/baldwin-cpas) 5/12/25 11:49 AM [Construction](https://www.baldwincpas.com/insights/tag/construction) ![Tariffs & Turbulence: Guarding 2025 Project Budgets from Material-Price Spikes](https://www.baldwincpas.com/hubfs/tariffs.jpg) **The New Tariff Landscape** In March 2025, the Trump administration reinstated 25% tariffs on steel and aluminum imports, effective March 12, 2025. Subsequently, a universal 10% baseline tariff on all imports was imposed starting April 2, 2025, with higher rates for specific countries, including up to 145% on certain Chinese goods. These measures have led to significant volatility in material costs, with steel mill product prices increasing by 7.1% in March alone.   **Impact on Construction Budgets** The construction industry is feeling the pressure: - **Steel Prices**: A 7.1% increase in March has strained budgets for projects reliant on steel. - **Lumber Costs**: Despite a slight week-over-week decline, softwood lumber prices remain 23.5% higher than a year ago, adding approximately $10,900 to the cost of a typical new home. - **Nonresidential Construction Materials**: Prices for materials and services used in nonresidential construction rose 0.5% in February, following a 0.7% increase in January, indicating a trend of rising costs even before the full impact of tariffs.   **Strategies for Mitigation** To navigate these challenges, consider the following approaches: - **Contractual Safeguards**: Implement price escalation clauses, such as the ConsensusDocs 200.1 amendment, which allows for adjustments based on objective indices like the Producer Price Index (PPI). - **Financial Planning**: Reassess working capital requirements and update Work-in-Progress (WIP) schedules to reflect current material costs, ensuring compliance with bank covenants and maintaining bonding capacity. - **Tax Optimization**: Explore tax strategies, including Section 179 deductions and bonus depreciation, to offset increased equipment and material costs.   **Baldwin CPAs: Turning Volatility into Opportunity for Contractors** At Baldwin CPAs, we don’t just crunch numbers—we help construction firms turn market volatility into actionable strategies. Our Construction Industry Services Team delivers: - **Job Costing & Profitability Consulting** We help you track how material cost fluctuations affect project margins and identify ways to protect profitability, even on fixed-price contracts. - **WIP Schedule Advisory** Our team ensures your work-in-progress schedules accurately reflect real-time cost pressures—critical for bank reporting, bonding capacity, and cash flow management. - **Tax Planning & Cash Flow Strategies** Whether it’s maximizing Section 179 deductions for equipment purchases or timing material capitalization to your advantage, we tailor tax strategies that work for your unique project timelines. - **Audit & Assurance Services** For contractors seeking financing, bonding, or partnership opportunities, our audit-ready financial statements stand up to the toughest scrutiny. - **Business Advisory** From contract structuring to ownership transitions, Baldwin CPAs brings decades of industry experience to help you make confident decisions, even in turbulent markets. **Don’t let tariffs and price volatility catch your business off guard.** Let Baldwin CPAs help you build resilience—and profitability—into every bid. [**Contact us today**](https://www.baldwincpas.com/construction).   - [Tweet](https://twitter.com/share) [![From Safety Week to Summer Heat: Turning Compliance into Profit Protection](https://www.baldwincpas.com/hubfs/safety.jpg) ](https://www.baldwincpas.com/insights/how-heat-safety-compliance-can-protect-your-bottom-line) #### [From Safety Week to Summer Heat: Turning Compliance into Profit Protection](https://www.baldwincpas.com/insights/how-heat-safety-compliance-can-protect-your-bottom-line) [Baldwin CPAs](https://www.baldwincpas.com/insights/author/baldwin-cpas) : 5/12/25 11:49 AM Construction Safety Week, which wrapped up earlier this month, reminds contractors of the critical importance of proactive safety measures. While the... [Construction](https://www.baldwincpas.com/insights/tag/construction) [Read More](https://www.baldwincpas.com/insights/how-heat-safety-compliance-can-protect-your-bottom-line) [![Keeping Morale High During Holiday Deadlines: Tips for Construction Teams](https://www.baldwincpas.com/hubfs/shutterstock_1835866204.jpg) ](https://www.baldwincpas.com/insights/keeping-morale-high-during-holiday-deadlines-tips-for-construction-teams) #### [Keeping Morale High During Holiday Deadlines: Tips for Construction Teams](https://www.baldwincpas.com/insights/keeping-morale-high-during-holiday-deadlines-tips-for-construction-teams) [Baldwin CPAs](https://www.baldwincpas.com/insights/author/baldwin-cpas) : 11/20/24 10:25 AM The holiday season can be a challenging time for construction companies. As deadlines approach and project pressures mount, it’s natural for stress... [Construction](https://www.baldwincpas.com/insights/tag/construction) [Read More](https://www.baldwincpas.com/insights/keeping-morale-high-during-holiday-deadlines-tips-for-construction-teams) [![How is Construction Technology Reshaping the Industry?](https://www.baldwincpas.com/hubfs/Tech%20In%20construct-1.jpg) ](https://www.baldwincpas.com/insights/how-is-construction-technology-reshaping-the-industry) #### [How is Construction Technology Reshaping the Industry?](https://www.baldwincpas.com/insights/how-is-construction-technology-reshaping-the-industry) [Baldwin CPAs](https://www.baldwincpas.com/insights/author/baldwin-cpas) : 5/19/23 3:38 PM Technology is evolving by the day and with it, so are our lives. The construction industry is no exception. Many aspects of the industry are... [Construction](https://www.baldwincpas.com/insights/tag/construction) [Read More](https://www.baldwincpas.com/insights/how-is-construction-technology-reshaping-the-industry)