Editor’s Note: This is part two of a two-part story examining the impact tariffs may have on the storage industry and what developers, owners and operators can do to navigate the challenges. To read “Tariff Times, Part 1,” visit here.
By Carl Oliveri and Ronald J. Eagar
The U.S. construction industry continues to face significant headwinds as new tariff policies add pressure to an already challenging environment. In recent months, changes in trade policy have introduced heightened costs for key construction materials and uncertainties around global supply chains.
In March, a 25% tariff was imposed on essential materials, including steel, aluminum, lumber and copper — core components for construction projects. Then, in April, the administration announced a sweeping “reciprocal tariffs” policy introducing a 10% baseline tariff on all imports and additional duties for select trading partners. Although this policy was temporarily paused for 90 days — until July 8 — for most categories, it has already created uncertainty across the construction supply chain.
Despite this partial pause, construction material prices remain 41% higher than pre-pandemic levels.* This price pressure compounds existing challenges: shrinking backlogs, a tight labor market and a supply chain struggling to return to pre-2020 stability. To respond proactively to these pressures, the following strategies can help firms stay ahead of cost, contract, and supply chain risks.
STRATEGIES TO PREPARE YOUR ORGANIZATION FOR TARIFF CHALLENGES
- Establish an open dialogue with all involved parties
Shift your organizational culture toward transparency. Engage in open discussions with project owners, fellow contractors, and vendors to surface potential issues early. A collaborative approach helps all parties reach reasonable solutions, particularly when everyone feels the impact of similar economic pressures. - Review contracts for vulnerabilities
Re-evaluate existing contracts project-by-project to determine how exposed they are to tariff-related cost increases. Pay close attention to change order triggers, force majeure provisions, and price escalation clauses.
For new contracts, negotiate terms addressing material substitutions, pricing
adjustments, and extended lead times. Don’t underestimate how delivery delays might
affect liquidated damages (LDs). Include tariff-specific language and align “flow-down”
provisions between prime and subcontractor agreements.
- Create clarity with financial management
Strong financial oversight is essential. Implement detailed project budgets and cash flow forecasts, highlighting timing or cost-related risks. This clarity should extend throughout the organization, from leadership to field operations. Increase meeting frequency between the project, finance, and accounting teams to spot issues early and adjust as needed.
- Optimize material procurement strategies
Material-intensive contractors should consider:
- Stockpiling: Lock in prices by purchasing and storing materials on-site or in alternative solutions like self-storage. Billing for stored materials in advance can also help support cash flow.
- Supply diversification: Build resiliency by diversifying domestic and international suppliers to reduce dependency on single sources.
- Alternate materials: Offer feasible substitutions to owners or explore in-house production for select items. Forward contracts or hedging can also lock in prices and limit risk.
- Contract reassessment: Revisit terms in existing agreements. Payment structures such as lump-sum monthly contracts may not account for cost spikes caused by tariffs.
- Adapt to changing credit strategies
Tariff volatility may lead lenders and sureties to take more conservative positions, so strengthen pre-qualifications for subcontractors and vendors to prevent disruptions. Projects that didn’t previously require bonding may now warrant payment and performance bonds. Maintain proactive communication with sureties so they understand your evolving risk management strategies.
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RV Industry Association Reports Latest News on Tariffs
- On Tuesday, June 10th, the U.S. Court of Appeals for the Federal Circuit ruled that President Trump’s International Emergency Economic Powers Act tariffs will remain in effect during the appeal process.
- The Court, stating that this litigation raises issues of “exceptional importance,” will have the 11-member court hear the appeal, rather than go before a three-judge panel first. It is scheduled for arguments on July 31, 2025.
- The bottom line: This means that the International Emergency Economic Powers Act tariffs will remain in effect through at least July 31.
Go Deeper: View the latest tariff updates…
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LOOKING FORWARD
Construction costs are expected to remain elevated for the foreseeable future, and industry 
leaders must plan for sustained increases. Some price increases may be opportunistic rather than directly linked to tariffs, as market participants capitalize on the uncertainty. The policy environment remains fluid. While the administration’s pause on the reciprocal tariffs offers temporary relief, conditions could change quickly based on broader economic or geopolitical developments.
Still, the construction industry has consistently shown resilience and adaptability. Applying lessons from past disruptions — such as tighter financial controls, more innovative procurement, and more resilient contracts — can help firms remain agile in the face of uncertainty.
By preparing now and embracing a flexible, informed approach, construction leaders can position their organizations to navigate the current tariff landscape and whatever comes next.
Ronald J. Eagar is the president of Grassi & Co. Certified Public Accountants and is a member of the firm’s executive committee. He holds three decades of experience in both public and private accounting. He serves as a trusted advisor to companies in a broad range of industries, including construction, real estate, not-for-profit, transportation, import and export, wholesale distributors and high net worth individuals. Carl Oliveri is the construction practice leader and a partner at Grassi. He has over 25 years of experience advising owners and executives in the construction industry, particularly in project-centric and companywide financial modeling, operational strategy development, financial statement accounting services and income tax method analysis. Grassi is a leading provider of advisory, tax and accounting services for businesses and individuals. With offices in New York, New Jersey, Florida and Massachusetts, Grassi specializes in industry-specific solutions for key market sectors across the country, including construction, real estate, health care, manufacturing and distribution, nonprofit, financial services and more.
