🌆 ACE Club Digest - This Is Fine...Right?

Save the Date for the Spring Hang! Wednesday May 14th. Come grab a brew at Beer Authority in Time Square after work. Weather permitting we’ll be hanging on their outdoor terrace.

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This is Fine…Right?

If you're in the building industry, your CFO is probably experiencing a bit of whiplash right now. Here’s what you need to know about tariffs:

• Earlier this month we were sent scrambling by the Trump administration’s announced baseline tariffs of 10% on nearly all imported goods, with hefty additional levies—34% for Chinese products and 20% on EU imports.

• This week President Trump announced a 90-day pause on most new tariffs, holding at a baseline of 10%… Except tariffs on Chinese imports, which soared dramatically to 125%.

• Steel and aluminum tariffs were set at 25% and 10%, respectively. Canadian lumber is tagged with a 14.5% duty, set to rise above 50% later this year. These tariffs were not impacted by this week’s pause.

• Many banks are predicting a recession by the end of this year as a result of economic volatility, expected price increases and declining consumer confidence

Zooming out for a second, it’s worth noting that this is only the newest (but quite major) event driving a long-term trend. Construction material costs have surged by 34% over the last 5 years, with the latest tariffs adding another $9,200 to building a typical home.

We’re all feeling the pain here.

Owners and developer are wary

There’s nothing property owners hate more than uncertainty. While a relief, the 90-day pause to some new tariffs are likely doing little to boost the near-term market outlook for AEC pros. Many owners continue scaling back, postponing, or outright canceling projects, particularly those heavily reliant on Chinese materials.

Ken Simonson from AGC captures the cautious vibe: "Some owners may still defer or scale back projects due to uncertainty around tariff outcomes."

However, if you do have a project in your pipeline, early-stage value engineering is a necessity. Designers, engineers and estimators all have roles to play here.

Contractors get flexible

GCs are leaning on price-escalation clauses in contracts to offer protection from surprise cost spikes. Subs meanwhile are stockpiling key materials, hoping to avoid the brunt of potential growing costs. Unfortunately, both of these strategies are out of reach for smaller firms that lack leverage and cash.

But if you’re a contractor you know that materials costs are only part of your headache. Tougher immigration enforcement means growing labor shortage. That’s why many are now investing heavily in recruiting and training capabilities.

Navigating the New Normal

We’re all in wait-and-see mode right now.

My personal stance is one of cautious optimism. Volatility doesn’t help anyone, but given a few months for everything to settle we might find ourselves back on an upward growth trajectory again.

📰 Our favorite reads, listens & watches

• Am I my target market? - An insightful look into how a venture capitalist thinks about the viability of new construction tech products

• Value Engineering vs Value Cutting - An Owner’s Rep’s take on how to align project design with value goals

• Circularity in Construction - A look at how we can make effective use of old materials from demolished buildings, and upscale our reuse efforts.

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Until next time,

Emma & Sawyer