The global economy faces economic uncertainty as a new phase of protectionism and policy realignment comes into play, following the announcement of global tariffs on all goods imported to the United States.
Despite a 90-day reprieve on reciprocal tariffs, the universal rate of 10% will still have a significant impact on the construction industry.
The full impact of tariffs is yet to unfold, as countries impacted consider their longer-term response. However, it is clear that the global construction industry will be impacted in the short to medium term. In order to help clients navigate this situation as it continues to unfold, Linesight has prepared this paper to provide an overview of the potential impact and guidelines on mitigating strategies for construction projects.
Linesight will continue to monitor the evolving situation and will provide updated guidance regularly as the impact becomes clearer.
A universal base-level 10% tariff on all imported goods and materials took effect on April 2nd. A 90-day pause was announced on April 9th for higher, country-specific reciprocal rates on 57 countries, with which the US has trade deficits.
The full global impact of the tariffs introduced is uncertain, with significant retaliation from China and agreement by the EU to impose retaliatory tariffs on €21bn (£18bn) of US goods. Other countries impacted are striving to negotiate the higher level of reciprocal tariffs. The 90-day pause provides additional time for negotiation, but further adds to the global uncertainty and market volatility.
The construction of mission-critical facilities is being significantly affected by recent US tariffs. In addition to increased costs for traditional building materials, these projects are also grappling with rising expenses and delays related to essential infrastructure systems, including computer hardware, cooling and power equipment. Much of this equipment relies on foreign manufactured components, which are now subject to tariffs.
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Rising costs and project delays
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Prefabrication and modular trends acceleration
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Trade realignments
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Supply chain impact
Rising costs and project delays
Prefabrication and modular trends acceleration
Trade realignments
Supply chain impact
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Rising costs and project delays
Steel, aluminum, copper wiring, prefabricated modules, and electrical components are all at risk of price hikes. In addition to increased costs for traditional building materials, mission-critical projects are also grappling with rising expenses and delays related to essential infrastructure systems, including computer hardware, cooling, and power equipment.
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Prefabrication and modular trends acceleration
The cost impact of supply chain disruptions hinges heavily on the project’s procurement stage and sourcing model. Some projects may have already locked in contracts for long-lead equipment, partially insulating themselves from price volatility. In contrast, smaller developers and late-stage buyers are more exposed to escalating costs. The supply chain for long-lead items is highly complex and globally interconnected.
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Trade realignments
While tariffs may impact prefabricated modules, US-based prefab facilities could see growth, as builders look to offset rising labor and component costs.
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Supply chain impact
Manufacturers in Southeast Asia, Taiwan, and Latin America are likely to explore other markets, to replace US demand.
