Steel Tariffs Doubled: How the Hike Could Reshape Construction Projects at Home and Abroad

Introduction

To date the Trump Administration has issued multiple proclamations imposing varying rates of import duties on steel and aluminum and certain derivatives, including construction materials. These measures have added volatility and financial pressures to the construction sector both in the United States and abroad. Most recently, on June 3, 2025, President Donald Trump issued a proclamation under Section 232 of the Trade Expansion Act of 1962, doubling tariffs on imported steel and aluminum from 25% to 50%, effective June 4, 2025. This action aims to counteract the continued influx of lower-priced, excess steel and aluminum imports that, according to the administration, threaten U.S. national security by undermining domestic production capacity. The proclamation notes that while prior tariffs provided some price support, they were insufficient to achieve the necessary capacity utilization rates for sustained industry health and defense readiness. The United Kingdom remains temporarily exempt at the 25% rate until July 9, per the U.S.-U.K. Economic Prosperity Deal.

Repercussions for Infrastructure Projects in the United States

U.S.-based owners, developers, and contractors who rely heavily on steel inputs for framing, infrastructure, and other structural components are experiencing financial pressures which will trickle down to other sectors. Disruption to steel imports, especially from long-standing trade partners such as Canada and Mexico, may strain availability and further drive-up prices across the commercial sector, which could derail current and planned infrastructure projects. Contractual ambiguities may engender disputes about which parties are required to incur increased costs. The tariff hike also introduces new volatility into procurement planning, potentially delaying project schedules and increasing risk in long-term budgeting.

Repercussions for Infrastructure Projects Outside the United States

The increases in steel tariffs are reverberating throughout the global construction industry. Owners, developers, contractors, and governments may seek opportunities for cheaper foreign steel for international projects, but tariffs have the potential to impact the overall cost of construction projects worldwide. As a result, it is important to prepare for price volatility based on the tariff-induced financial impact on foreign steel producers, strained supply chains, and tighter margins, especially on large-scale infrastructure projects.

While domestic construction is already feeling the pinch, international projects—often reliant on cross-border procurement and foreign engineering partnerships—are also vulnerable. Projects such as airports, stadiums, railways, water treatment plants, power plants, roads, bridges, ports, and industrial facilities are all likely to be affected by destabilization of global markets. The challenges contractors may face as a result of the tariffs include:

• Fixed-Price Contracts at Risk: Many construction contracts are fixed-price and long-term. Tariff-induced cost spikes can cause budget overruns, erode profit margins, and lead to legal disputes if contract terms do not clearly provide for the allocation of cost escalations or a party seeks to avoid additional costs based on force majeure or another legal theory.
• Supply Chain Uncertainty: Owners and contractors may be forced to seek alternative suppliers or adjust to changes in material availability and lead times. Exacerbating this, infrastructure projects often require specialized steel elements such as long-span trusses and blast-resistant materials. Disruptions in global supply could result in shipment delays or force the use of more expensive substitutes.
• Design and Engineering Revisions: Some contractors may now have to re-evaluate architectural designs to reduce steel usage or incorporate modular elements that can be procured locally to avoid import costs.

As steel tariffs continue to evolve alongside geopolitical and trade tensions, the global construction sector must stay agile, manage risk, and navigate complex economic terrain to keep projects like these on track for completion.

How countries respond to the U.S.’s new steel tariffs will also have an impact on the viability of current, and future, infrastructure projects. For example, after the first round of tariffs imposed by Trump in April 2025, Gerdau, a Brazilian steel manufacturer, cancelled a planned $600 million investment into a new steel plant in Mexico citing uncertainty from U.S. tariffs.^[1] Given the immediate impact on foreign investment by these tariffs, it is not surprising that Mexico’s President Claudia Sheinbaum said at a press conference on June 4, 2025, that if no agreement with the U.S. is reached, Mexico will announce retaliatory measures on the U.S. aimed at protecting Mexican industry, as it is a net exporter of steel to the U.S.^[2]

Tracking how different nations are affected by the new tariffs will be of utmost importance for contractors who are having to source steel and aluminium products for major construction projects and navigate complex supply chains.

Strategies to Navigate Increased Tariffs

Based on the previous impact of Trump’s tariffs, these measures typically trigger a fairly immediate reaction from the U.S. steel industry as imports face new hurdles. Domestic steel producers expand operations to fill the void left by reduced international competition, leading to rising steel prices. This price volatility affects industries reliant on steel, impacting construction projects. Employers, contractors and sub-contractors with active or upcoming construction projects should review their contract terms to ensure those contracts adequately mitigate these new risks.

• Alternative Material or Supplier Substitution: Construction contracts can include provisions for alternative materials to tackle rising costs due to tariffs. These provisions enable parties to propose substitutes that maintain the quality and performance of original materials when prices exceed a set threshold. This flexibility helps stakeholders manage procurement challenges and minimize disputes by clearly defining work scope and material specifications.
• Price Escalation: To manage market volatility from tariffs, construction contracts can incorporate price escalation provisions. These allow for contract price adjustments in response to uncontrollable increases in supply and material costs. Such provisions should explicitly address accounting for tariffs.
• Dispute Resolution and Governing Law: In anticipation of the uncertainty accompanying evolving tariff policies, contractors should consider the strength of the dispute resolution provisions in their construction contracts. Well-drafted clauses are critical in efficiently resolving disagreements over cost increases, delay, or scope modifications. Particularly in cross border projects, arbitration may offer advantages over litigation, including enforceability across jurisdictions, enhanced confidentiality, and the ability to select arbitrators with industry specific expertise. Selecting the governing law is also an important consideration that may impact how tariff disputes will be resolved. Parties should avoid boilerplate terms and instead consult counsel to ensure that dispute resolution and governing law provisions align with their risk management strategies and reflect the realities of global supply chain volatility.

Conclusion

With the doubling of steel tariffs now in effect, the construction industry is entering a new period of financial and logistical risk. U.S.-based and international owners, developers, and contractors must navigate rising material costs and supply disruptions while operating under contractual frameworks that often provide limited mechanisms for price or schedule adjustments. The impact extends beyond steel itself, disrupting project timelines, straining global supply chains, and prompting potential legal disputes, particularly under fixed price or cross-border agreements. In this environment, proactive risk management is no longer optional. Contractors, developers, and project owners should consult counsel to re-evaluate procurement strategies and revisit contract language, while staying informed of the rapidly evolving trade landscape.