Most construction owners are already feeling the pressure. Steel and aluminum tariffs reached 50% in mid-2025. Copper followed at 50% shortly after. Aggregate construction costs are estimated to have risen roughly 8% under current policy conditions, with longer-term tariff impacts ranging from 5% to 25% depending on material type. 

The conversations I hear most often right now are about margins — how to protect them, how to pass costs on, how to hold bids together when material prices shift between estimate and pour. Those are the right conversations to be having. 

But there is a second conversation that most construction owners are not having yet. And it is the more expensive one. 

Margin Compression Is a Valuation Problem 

When input costs rise unpredictably, margins compress. When margins compress, the financial picture that lenders, investors, and buyers use to value a business changes — sometimes significantly. 

This is not a theoretical risk. It is how outside parties actually read the numbers. 

Buyers and lenders are not just pricing what a business earned last year. They are pricing what it is likely to earn going forward, and how much certainty they can place on that number. A business operating in a volatile cost environment, without systems to absorb or adapt to that volatility, tells a story of risk. That story has a price. 

What the Numbers Are Showing 

 The data from 2025 and into 2026 paints a clear picture of how far and fast this pressure has moved through the industry. 

Aluminum mill shapes were up 33% year-over-year through January 2026 — the largest annual increase since the supply chain disruptions of 2022. Steel mill products rose 20.7% year-over-year, with coil-based products surging as much as 50% since January 2025. The producer price index for materials and services used in nonresidential construction rose 3.3% from December 2024 to December 2025, with copper and brass mill shapes climbing 11.8% over the same period.  

As of April 2026, steel, aluminum, and copper items made entirely or mostly from those metals carry a 50% tariff. Derivatives of those metals sit at 25%. Industrial and electrical equipment incorporating those materials faces a 15% tariff. Softwood lumber carries a 10% tariff, with derivative products at 25%.  

Some general contractors have started building tariff-contingency line items directly into early-stage budgets — a practice that was rare before 2025. Contracts that used to lock in a guaranteed maximum price early in design are increasingly including escalation clauses tied to steel and metals indices. For construction businesses that price work months in advance, manage thin margins on long projects, and carry material-heavy cost structures, this is not background noise. It is a structural shift in the operating environment — one that outside parties are watching closely. 

The Businesses That Come Through This in the Best Position 

Cost volatility is external. The policy decisions driving tariffs are not something any construction owner controls. But how a business is structured to absorb and navigate that volatility is entirely within an owner’s control — and it is exactly what lenders, investors, and buyers are evaluating when they look at a business operating in this environment. 

The construction businesses that hold their valuation through a period like this share a few things in common. 

One of the ways to address this risk and combat eroding margins is to include paragraphs within quotes and contracts which contain re-pricing mechanisms or price-review contingencies to deal with price changes over a certain threshold. 

They should also consider the time value of money, and if payment terms are extended too far, the construction company has just become a bank, but one lending at zero percent interest! 

Their financials show margin by project, not just total revenue. When a business can demonstrate which types of work are profitable under current cost conditions — and which are not — it removes a significant layer of uncertainty from any outside party’s assessment. 

Their pricing strategy reflects current input costs, not last year’s assumptions. Businesses that have built mechanisms to reprice work, renegotiate terms, or pass through material escalations are demonstrably more resilient than those absorbing increases silently until margins disappear. 

Their cost structure is documented and understood. When a business can explain its cost model clearly — what drives it, how it moves with material prices, where the buffers are — that transparency builds confidence. The alternative, a business where costs are managed by feel and institutional memory, raises questions that uncertainty-averse buyers and lenders are not inclined to answer generously. 

And their operations do not depend entirely on the owner to navigate uncertainty. When market conditions shift rapidly, a business that requires the owner’s personal judgment for every response is slower, more exposed, and harder to value than one with management depth and decision-making systems in place. 

What This Means Right Now 

The tariff environment is not going away quickly. Construction owners who spend the next 12 to 24 months building the kind of financial clarity and operational structure that holds up under scrutiny will be in a fundamentally different position than those who absorb the pressure and wait for conditions to normalize. 

The owners who come through volatile periods in the strongest position are not necessarily the ones with the best luck on material pricing. They are the ones whose businesses were built to be understood, evaluated, and trusted — regardless of what the cost environment is doing. 

Find Out Where Your Business Actually Stands

Most owners know something is holding their business back. The PEAK Performance Assessment finds exactly what that is.

It measures the four areas that outside decision-makers pay the most attention to — Profitability, Enterprise Value, Accountability, and Key-Person Risk — and surfaces the specific gaps in each one. Not a general overview. A specific result tied to where your business actually is.

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Sources 

1. Cushman & Wakefield — The Impact of Tariffs on U.S. CRE Construction Costs (April 2026) — cushmanwakefield.com 
2. Grit Insurance — How Tariffs Are Driving Up Construction Costs and What It Means for Your Insurance (June 2026) — gritinsurance.com 
3. Tax Credit Advisor — 2026 U.S. Construction Cost Outlook (January 2026) — taxcreditadvisor.com 
4. Associated General Contractors of America — Double-Digit Increases in Aluminum, Steel and Copper Costs Drive Up Producer Price Indexes for Construction Materials (January 2026) — agc.org