This article was featured in the June 2025 edition of the Connecticut Construction Industries Association’s CONNstruction Magazine.
The construction industry is at the mercy of the market volatility created by shifting trade policies, and sweeping executive orders that have rapidly reshaped the construction landscape overnight. The lingering uncertainty affects budgeting, costs, project timelines, and parties’ willingness to carry risk. Volatility often stems not only from supply chain disruptions and broader economic instability caused by tariffs, but also from perceived market shifts that savvy contractors build into project estimates in order to temper risk.
Like every market cycle, this one will produce winners and losers. Winners will be those who offload pricing and tariff risk, best align with the new administration’s shifting priorities, identify and capitalize on deregulation, and anticipate market shifts faster than their competitors, gaining ground and market share.
Construction “wins” may emerge in the need for new or expanded data centers, fueled by the administration’s embrace of AI and cryptocurrency, as well as in traditional infrastructure as the Trump Administration resets surface transportation priorities over the coming years, and looks to centralize control over these Projects at the federal level. By way of example, the U.S. Department of Transportation recently announced it will take over the Penn Station reconstruction from local agencies.
Other opportunities should emerge in domestic manufacturing, particularly biotech, aerospace, and defense. In Connecticut, this dovetails with the state’s strengths and the administration’s push to bolster and expand onshore supply chains. Defense contractors stand to benefit from increased military spending, and Connecticut contractors that serve this sector are well-positioned to take advantage of the increased emphasis on defense spending. Nationally, fossil fuel and potentially nuclear sectors should regain traction, opening up opportunities that were largely dormant under the prior administration’s policies.
Who are the potential losers in this new world order? Those unprepared or unable to navigate the volatility that accompanies the Administration’s policy sea change. Tariff-driven price hikes in steel, aluminum, and Canadian lumber will again strain supply chains, especially in Connecticut, where proximity to Canadian imports once kept costs down. Clean energy and sustainable construction will also face headwinds from the rollback of environmental regulations, the anticipated gutting of Inflation Reduction Act incentives, and a reduced focus on LEED-certified and solar projects. Contractors must remain nimble.
This article discusses potential impacts – positive and negative – of the new administration’s policies and offers potential avenues for contractors to consider in dealing with the ensuing market volatility.
Further Discussion of Potential Impacts of Tariffs and Executive Orders
Tariffs on goods such as imported steel and aluminum have made foreign products more expensive. The argument is that this dynamic provides domestic manufacturers a competitive edge. In turn, this can lead to strengthened domestic industries and job creation. For instance, in 2018, President Trump imposed 25% tariffs on imported steel and 10% tariffs on aluminum, which increased domestic output, opened new steel plants, created new jobs, and reduced the United States’ dependence on foreign metals. The Executive Branch contends that 2025 tariffs may present similar positive outcomes and drive construction spending to support this manufacturing. In addition, the Executive Branch is actively seeking to roll back policies of the predecessor administration through various executive orders designed to streamline the process of project implementation.
In 2017, during his first administration, President Trump issued Executive Order 13807, which sought to streamline environmental reviews and permitting processes for major infrastructure projects. After the Biden Administration repealed the order, President Trump has sought a similar approach with Executive Order 14154, which directed the Council on Environmental Quality to rescind its National Environmental Policy Act (NEPA) regulations. Further, on April 8, 2025, an Executive Order titled “Reinvigorating America’s Beautiful Clean Coal Industry and Amending Executive Order 14241” reclassified coal as a strategic national asset and directed federal agencies to revise or rescind any of their policies that discouraged coal production. Connecticut contractors operating in industries with significant federal regulatory and environmental hurdles may now face fewer federal obstacles, although state and local challenges will remain in a climate that is not traditionally “business-friendly.”
During the COVID-19 pandemic, supply chain disruptions and labor shortages caused extreme price volatility. In response, contractors increasingly sought relief for material escalation while grappling with suppliers and subcontractors unwilling to absorb these risks. Many smaller subcontractors and suppliers chose — or threatened — default or breach rather than complete contracts at a financial loss. Attempts to shift these risks to owners, awarding authorities, and developers were met with mixed success. Notably, the post-COVID pricing environment revealed the “stickiness” of inflated construction costs; even as inflation eased, material prices failed to return to pre-pandemic norms. It is likely these trends will continue, and the “stickiness” of pricing increases will outlive the actual tariff-related cost increases.
In addition, as material costs continue to climb, developers are more likely to delay or suspend construction projects until pricing stabilizes, additional funding becomes available, or the pro-forma(s) make more sense. These challenges are only heightened by interest rates that remain well above the historically low levels we have enjoyed for the past two decades. Finally, market volatility between bid submission and project execution, driven by tariffs and economic uncertainty, threatens to erode contractors’ profit margins and may even jeopardize the existence of less financially resilient firms, leading to further industry-wide delays and defaults.
Volatility Mitigation Strategies
To navigate the challenges posed by tariffs, construction companies can implement several strategies, similar to those adopted during the pandemic fallout, including negotiating contract provisions to blunt the impact of market volatility. Expanding force majeure provisions to include tariff-related disruptions can provide potential relief from delays and additional costs arising from unforeseen trade policies. Contractors will continue to seek equitable adjustments for cost impacts from tariffs and executive orders issued while projects are ongoing with varying degrees of success in obtaining relief. To avoid negotiating from a position of weakness, contractors must bring these issues to the forefront with owners during the bidding and contract negotiation phases.
In addition, where applicable, the strategic use of construction contingency or allowances – allocating specific amounts within the project budget to cover unforeseen costs such as those resulting from tariffs and executive orders – can serve as a financial buffer, ensuring project continuity despite market fluctuations. Proactively purchasing materials before the imposition of tariffs, in cooperation with project owners, can lock in prices and secure supply, mitigating the impact of future trade policies or supply chain delays.
To navigate executive orders affecting Diversity, Equity, and Inclusion (DEI) programs, prudent Connecticut contractors should thoroughly audit their hiring policies and practices to ensure full compliance. This includes removing any training or procedures that could be construed as endorsing race or sex-based hiring. Contractors should adopt federally accepted criteria for hiring and promotions, ensuring that hiring decisions are focused on qualifications, skills, and performance. Additionally, Contractors should consider requiring that subcontractors, suppliers, and vendors certify compliance with federal anti-discrimination laws and applicable executive orders.
Conclusion
Market volatility resulting from the imposition of new tariffs, and executive orders create both challenges and opportunities for the construction industry. Contractors that anticipate these shifts and implement smart mitigation strategies, such as advance purchasing, risk-sharing, and crafting creative contract clauses, can not only weather disruptions but also thrive. Moreover, those Connecticut contractors who successfully navigate the intersection of competing federal, state, and local priorities, capitalize on deregulation, and anticipate market shifts faster than their competitors are best positioned to lead the construction industry in these uncertain times. As the Rolling Stones put it, “time waits for no one.” The construction market evolves quickly and will wait for no one. Staying informed and agile is not optional in these volatile times – it is essential for resilience and success.
Author’s Note* In light of the fluid nature of the matters discussed herein, it is likely there will be significant changes between when this article was written and when it is published. This article does not constitute legal advice; parties should seek legal counsel relative to their specific legal position(s).
