Protecting Profits Amid New Trump Tariffs on Steel and Aluminum

It was announced Monday Feb 10th that President Trump has reinstated 25% tariffs on all steel and aluminum imports, with no exceptions for key allies like Canada, Mexico, and South Korea. Effective March 4, these tariffs aim to level the playing field by countering foreign government subsidies, particularly from China, that allow cheaper steel to flood the U.S. market. President Trump is also looking to impose “reciprocal” tariffs to match tariffs on trading partners and looking at duties on semiconductors, cars, pharmaceuticals and other products in the days and weeks to come.

While American steel producers like U.S. Steel and Nucor are celebrating the move, construction companies face rising material costs. Without the carve-outs previously available during President Trump’s first term, businesses should brace for increased expenses that could eat into profits.

What This Means for Florida’s Construction Industry

Florida’s booming construction sector, heavily reliant on steel and aluminum, is particularly vulnerable. Higher material costs could lead to thinner profit margins unless proactive measures are taken. At the 2025 Florida Transportation & Builders Association (FTBA) Symposium on Feb 12th, Florida Department of Transportation (FDOT) Secretary Jared Perdue responded to steel and aluminum tariffs concerns with “There are some potential ancillary impacts. I don’t think we should get overly anxious, but its something we want to pay attention to since it could impact our business.” He also highlighted the strong strategic position Florida is in large part to the state’s regulatory leanings, tax burden and pro economic growth leadership. FDOT has been more adaptable to material escalations in the last 5 years compared to many other Government agencies and state DOTs. I’ve seen firsthand how FDOT, in collaboration with contractors, designers, suppliers and the FTBA (under outgoing FTBA President Ananth Prasad’s leadership), have developed a strong playbook—one that will prove invaluable in times like these.

The construction markets impacted by the Build America, Buy America Act (BABA) may also be better insulated to the tariff impacts since the Act mandated federally funded infrastructure projects primarily use American-made steel and aluminum products. Since material escalation rules vary by project owner and contract, let’s explore key strategies construction business owners can use to safeguard their businesses from potential impacts.

Strategies to Protect Your Bottom Line from a Construction Attorney, Carly Newman:

  1. Include Material Escalation Clauses: When negotiating new contracts, use clauses that account for potential increases in material costs. This ensures you’re not locked into pricing that doesn’t reflect market realities. 
  2. Review Force Majeure and Delay Provisions: Trade disruptions can lead to delays. Review the force majeure and delay provisions for trade disruptions. Whether tariffs would be considered force majeure depends on the specific wording of the contract’s force majeure clause, so consult with your construction attorney to ensure you have favorable terms.
  3. Document Current Prices: For ongoing projects, thoroughly document current steel, aluminum and other impacted prices. This substantiates any future claims for cost adjustments.
  4. Mitigate Risks in Bidding: For upcoming bids, set time limits on material pricing to prevent unexpected hikes from eroding your profits.

This isn’t the construction industry’s first rodeo in recent history for major material price escalations. The construction and surety industries have learned a lot of lessons since 2020. Project owners contracting to General Contractors and General Contractors subcontracting out to subcontractors can have vastly different material escalation approaches in their contracts..some are more forgiving than others. Good project owners will want to proactively manage risks or at least have a process established. Contractors should consider the project owner’s willingness and ability to share unexpected significant material cost impacts when pricing in risk of new contracts. This is not easy when you’re bidding in a competitive bidding environment. Construction is both risky and rewarding—but one thing it never is, is boring. We hope employing these protective measures can help keep your construction projects profitable in this shifting economic landscape. Don’t hesitate to reach out to your surety agent and construction attorney for more advice.

By:
Sarah O’Linn, Construction Surety Agent/Partner at Florida Surety Bonds – [email protected]

Carly Newman, Construction Attorney/Partner at Hayes & Newman, PL

Tariff policy information sourced from Wall Street Journal article “Trump Imposes Global 25% Steel, Aluminum Tariffs” by Gavin Bade and Alex Leary (written Feb 11, 2025) and the White House Press Release (Feb 11, 2025)

*For informational purposes only – if you need legal advice, please contact a member of the Florida Bar