US contractors sound alarm over ‘extreme’ increases in steel, aluminium, lumber prices

The Associated General Contractors of America (AGC), analysing government data, reported that the producer price index for materials and services used in non-residential construction rose 0.2% in August and 2.5% year-on-year.

While the headline figure in August was modest, the increases were fuelled by sharp rises in steel, aluminium and lumber costs, offset by falls in oil and natural gas prices.

Aluminium mill shapes recorded a 5.5% jump last month and a 22.8% rise over 12 months, according to the AGC. Steel mill products rose 1.5% in August and 13.1% year-on-year, while lumber and plywood costs climbed 0.5% for the month and 4.8% annually.

AGC chief economist Ken Simonson said higher trade tariffs imposed on imports from other countries had “enabled domestic producers to push up their selling prices,”.

He referred back to a joint survey the AGC conducted with the National Center for Construction Education and Research (NCCER), which found that that 43% of contractors had seen projects cancelled, postponed or scaled back because of cost escalation.

The Trump administration raised tariffs on steel and aluminium to 50% in June, following an earlier increase to 25% in March, with copper products subjected to a 50% tariff from 1 August. Broader measures covering imports from most major suppliers were also introduced in early August, suggesting further inflationary pressure ahead.

Contractors are already adapting, with two in five firms raising prices, some accelerating purchases to pre-empt hikes, and 16% absorbing costs or sharing them with suppliers, according to the AGC. Nearly 40% expect further increases in the coming months.

AGC chief executive Jeffrey D. Shoaf urged the Trump administration to resolve outstanding trade disputes with China, Canada, Mexico and others. “There is a limit to how many price increases the market can absorb before owners put projects on hold,” he said. “The more the administration does to resolve trade disputes, provide more certainty and lower punitive tariff levels, the more demand for construction should rebound.”

Meanwhile, commenting separately on the price increases, Anirban Basu, chief economist at Associated Builders and Contractors (ABC), said, “Construction materials prices rose modestly in August, although the increase would have been larger if not for declining oil and natural gas prices.

“Prices rose at an especially rapid pace in some of the categories most affected by tariffs. Iron and steel prices, for instance, are now up 9.2% on a year-over-year basis, while copper wire and cable prices are up 13.8%.”

But he also noted that contractors remain confident about their prospects over the next six months, according to the ABC’s Construction Confidence Indicator, even in the face of an annualised increase in non-residential input prices of 5.3% in 2025.