Earl R. Hall, Executive Director, Syracuse Builders Exchange
The continuing trade dispute between the United States and Canada is creating a significant level of uncertainty for the New York State construction industry. The issue is particularly important to New York because Canada is the state’s largest trading partner, and Canadian-sourced materials, such as lumber, steel, aluminum, plywood, cement, and other construction products, which are integrated into New York’s construction supply chains. Recent developments in September increased the potential for higher material costs, supply disruptions, project delays and greater financial risk for contractors and project owners.
New York’s construction industry is a major component of the state’s economy, employing more than 400,000 New Yorkers and contributing more than $66 billion annually. The state has previously identified steel, aluminum, and lumber as important construction material affected by tariffs and warned that higher material costs can result in fewer projects, delays, and increased project costs.
Impact on Construction Contractors
For contractors, the most immediate concern is price volatility. A contractor may develop a bid based on a supplier’s quoted price, only to discover that a tariff or retaliatory measure has increased the cost before the material is purchased. This creates substantial exposure, particularly on fixed-price contracts where the contractor has limited ability to recover unforeseen increases.
The problem extends beyond materials imported directly from Canada. A product manufactured in the United States may contain Canadian steel, aluminum, lumber, or other components. As a result, purchasing from an American supplier does not necessarily eliminate tariff exposure.
Contractors are therefore likely to place greater emphasis on early procurement, supplier commitments, escalation clauses, allowances, contingencies, and alternative sources of supply. Owners and contractors may also face more negotiations over responsibility for tariff-related increases after a contract has been awarded.
Impact on Material Costs
The construction materials most exposed to the dispute in New York include lumber and engineered wood products, steel, aluminum, copper, plywood, and cement. Existing tariffs on steel and aluminum can reach 50%, while additional tariffs imposed during 2026 have expanded the number of Canadian construction-related products potentially affected.
Canadian softwood lumber is particularly important because Canada has historically supplied a substantial majority of U.S. softwood lumber imports. New York contractors, homebuilders and remodelers therefore have exposure to changes in Canadian lumber pricing even when the supplier is located in the United States.
Impact on Construction Project Owners
For project owners, the principal consequence is increased uncertainty in establishing and maintaining project budgets. Public agencies, private developers, hospitals, universities, manufacturers, and commercial property owners may face higher costs between initial design, bidding, and construction.
Projects that were financially feasible under earlier material prices may require additional funding or redesign. Owners may also encounter longer procurement periods when contractors seek alternative suppliers or wait for pricing to stabilize.
For public projects, these issues can be particularly significant because funding is often established well before construction begins. A substantial increase in steel, aluminum, lumber, or other materials can create a gap between the original project budget and the contractor’s actual cost.
Contracting and Risk Management
The New York tariff environment reinforces the importance of carefully drafted construction contracts. Owners and contractors should consider clearly defining who bears the risk of newly imposed tariffs, establishing material escalation provisions, identifying notice requirements, and determining how changes in law will affect the contract price.
Contractors should also consider obtaining firm supplier quotations, identifying tariff exposure during estimating and purchasing critical materials earlier when economically justified. Owners can reduce uncertainty through early contractor involvement, design flexibility, and realistic contingencies.
Outlook for New York
The most significant issue may be uncertainty rather than any single tariff. New York contractors operate in a highly competitive market where bids are often prepared months before construction begins. Rapid changes in trade policy can make conventional estimating assumptions less reliable.
The U.S.–Canada tariff dispute therefore has the potential to increase construction costs, compress contractor margins, delay projects, and cause owners to postpone or modify planned investments.
For New York’s construction industry, the coming period will require greater attention to procurement, contractual risk allocation, material sourcing, and cost forecasting. Until trade policies become more predictable, both contractors and owners should assume that material pricing and availability can change materially between the time a project is estimated and the time construction is completed. Whoever bears the fiscal responsibility for such unexpected and unanticipated changes should be illustrated in a contract.
The U.S.–Canada tariff dispute represents a material risk to New York’s construction industry. Its effects will extend beyond the importer paying the tariff and can ultimately reach contractors, subcontractors, suppliers and most likely project owners through higher prices, reduced availability, and increased uncertainty. Effective risk management, early procurement, contractual protection, and realistic project contingencies will become increasingly important as New York’s construction industry navigates the evolving trade environment.
Note: Reviewed and amended with the assistance of Microsoft Word and Chat GPT