Trump’s policy threats spurs construction businesses to rethink production plans
At the halfway-point of 2024, U.S. construction spending was down roughly 1.7 billion dollars from the previous year. Now construction businesses are figuring out how they can combat the new policies that President-elect Donald Trump has pledged to impose, according to industry leaders at EPD.
Calum Mair, Commercial Director North America for EPD, an aftermarket parts and components seller for construction, agricultural, and industrial machinery, has forecasted how the changes could threaten the construction industry, and how other businesses should be preparing:
“Since his election win, President Trump has threatened to impose a 60% tariff on imports from China, a 25% tariff on Canadian imports, as well as goods from Mexico. While it’s uncertain if these tariffs will go through, the proposed tariffs on imported materials could significantly raise construction input costs, impacting project budgets. We have begun prioritizing how to source materials domestically or from countries with lower tariff rates, and other businesses should do the same. Diversifying suppliers, both internationally and domestically, can reduce dependency on vulnerable trade routes. Companies should also consider stockpiling critical materials, leveraging technology for logistics, and focusing on no or low-tariff jurisdictions. His stricter immigration policies could also exacerbate the workforce shortages in the construction industry, especially in states heavily reliant on immigrant labor. It’s likely we will need to invest in workforce development programs, including training initiatives to attract and upskill domestic workers. Expanding the use of automation and construction technology can also help offset labor gaps.
“The uncertainty around interest rates has also posed new challenges when planning new construction projects, as fluctuating borrowing costs could impact financing. Looking ahead, businesses should prioritize cash flow management and explore alternative funding options to reduce dependency on loans, as well as adopting alternative materials and optimizing resource usage can help offset cost increases. Proactive planning is more important than ever and ensures resilience against interest rate volatility while supporting project feasibility.”
- Global ESG regulations could lead to higher prices for U.S. contractors
The U.S. is expected to ease environmental, social, and governance (ESG) regulations in the coming year, which, along with deregulation in the energy sector, means lower costs for builders and others in the construction industry. However, many countries where the U.S. sources construction supplies—such as those in the European Union—still must abide by stricter ESG regulations, which could lead to increased costs for building supplies from overseas.
“Stricter ESG regulations in supplier countries could drive up material costs for U.S. contractors. To mitigate this, construction firms should explore sourcing from regions with less stringent ESG mandates or prioritize domestic suppliers. Additionally, investing in sustainable practices and materials now can reduce long-term reliance on high-cost imports and align with future regulatory trends. Proactively adapting supply chains ensures cost control while maintaining compliance and sustainability goals.”
- Interest rates to remain uncertain for the near future
Although the Federal Reserve has forecasted a drop in interest rates over the next year, from around 4.5% at the end of 2025 to around 3.4% at the end of 2026, near-term rates are less certain. Interest rate volatility could affect businesses looking to start new projects in 2025 as higher rates make borrowing more expensive.
“Uncertainty around interest rates poses challenges for businesses planning new construction projects, as fluctuating borrowing costs could impact financing. To navigate this, firms should prioritize cash flow management and explore alternative funding options to reduce dependency on loans. Locking in rates when favorable and staggering project timelines can also mitigate financial risks. Proactive planning ensures resilience against interest rate volatility while supporting project feasibility.”
Mair added: “Although there may be challenges ahead, there are solutions businesses can adopt to help ease the burden they might cause. By diversifying supply chains, prioritizing domestic sourcing, and adopting sustainable materials, firms can offset the impacts of tariffs and global ESG regulations. Workforce development programs and advanced technologies can address labor shortages caused by stricter immigration policies. Additionally, proactive financial planning and resource optimization can help businesses manage uncertainty around interest rates and maintain project stability.”
The construction industry is looking to rebound in 2025. To do so, suppliers, builders, and contractors alike need to know what’s in store for the coming year. With a firm understanding of potential industry challenges, industry players will be better equipped to overcome them, leading to increased building projects and profits. For more information on construction industry trends, visit EDP.
About EPD
EPD, abbreviated from Excavator Parts Direct, specializes in providing top-quality spare and replacement parts for excavators and heavy machinery. With over 25 years of experience, we source OEM-quality components directly from leading manufacturers, ensuring guaranteed fitment and durability. Our expansive inventory includes over 30,000 parts, ready for next-day delivery. Committed to quality and customer satisfaction, we offer warranties, expert support, and seamless ordering through our Parts Finder tool. A global business with operations across multiple locations, including a U.S. office based in Austin, EPD is your trusted partner for keeping your machines running efficiently.
