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.
