Build it and they won't come once worked extremely well as a recurring theme for Donald Trump when he swapped reality TV for his bid to become a real politician.
But for a president who created an overwhelming groundswell of support when he first came on the political scene by promising to build an epically long wall and who amassed an eye-watering fortune as a property developer, Donald Trump's relationship with the construction industry was sketchy at best during his first term.
As the second term gets underway with a frenzy of executive orders, there is precious little evidence that Trump 2.0 will foster an improved relationship with construction.
Building and construction feature indirectly, rather than specifically, in a lot of initial pronouncements. But not all of them are particularly positive.
For political, economic and business watchers in the US, the UK and around the world, the return of Trump to the White House is already proving to be predictably unpredictable.
The stock market and the economy are Trump’s barometer of policy success
Paul Groves Group Editor for Specification
A rollercoaster ride
Ahead of the inauguration, Sebastien Tillett, Economist in Industry Services at Oxford Economics, was stating that the wild ups and downs experienced by the construction industry in recent years were likely to continue under the new administration.
And nothing that has happened in the first week of the Trump presidency suggests his prediction is wide of the mark.
“In the short term, fiscal stimulus will lead to stronger investment growth, benefiting non-residential construction,” he said “ However, by the end of the decade, the construction sector will face significant headwinds due to President-elect Trump’s polices on immigration and trade, eventually leading to higher input and borrowing costs for the sector.
“Repeated suggestions that Trump is serious about curtailing immigration spell trouble for the construction industry. Our baseline assumes that starting from mid-2025, net migration will fall from 1.1 million per annum to around 800,000 per year.
“There are downside risks to this forecast as Trump has repeatedly threatened mass deportations, but we do not include this in our baseline. According to US census bureau data, 26% of construction workers are immigrants and 13% of workers are unauthorised, the largest share of any sector. A reduction in the labour force will exacerbate the labour supply issue that the sector already faces, raising construction wages and increasing cost inflation.
“This will take time to manifest, however, as previous US arrivals will support the sector and the inflationary impact of costs will be lagged - new immigrants typically don’t join the labour force as soon as they enter the country, so the impact of immigrations cuts on labour force gains won’t be felt until 2026 and beyond.”
Tariffs equal price rises
Tariffs continue to form a key pillar of President-elect Trump’s economic policies and are likely to lead to higher input costs for the construction sector. In essence a sales tax paid by consumers, construction companies are likely to see the price for inputs such as lumber and steel increase as soon as the tariffs come into effect.
“There is some debate surrounding just how soon these tariffs can be implemented, but some will certainly begin to take effect by early 2026,” he added. “Companies will face either a hit to profit margins, causing supply-side issues as businesses find less profitable work available, or they will be forced to raise prices.
“We may see firms try to shore up supplies or find new sources before tariffs come into effect, but this will also raise short-term costs as inventory expenses are high and nearshoring attempts seen during the initial US-China trade war are off the table due to likely tariffs on Canada and Mexico. Our baseline forecast assumes 10% tariffs on Canadian steel, aluminium, and base metals, with 10% on Mexican steel and aluminium as well.
“It remains to be seen whether the Trump administration will consider the long-term vulnerability of the sector when implementing his new economic agenda.”
No second guessing
Robert S. Bernstein, of leading US law firm Holland & Knight, is another quick to point out that second guessing and making assumptions about President Trump, part two, is a pointless exercise.
“President Donald Trump's career in construction and development has made many believe that he will be a champion for the construction and infrastructure sectors in his second term,” he said.
“Expect President Trump to be a vocal champion of construction and infrastructure in his second term and to take legislative actions to encourage ambitious projects. Though some Trump positions, most notably on immigration and trade, may present challenges that could be a counterweight, those positions are likely to be moderated.”
The tariffs and resulting price increases will significantly impact infrastructure projects budgeted before their announcement. “Existing contracts may not include provisions for cost adjustments due to tariffs, leaving owners and contractors to negotiate how to handle these unexpected expenses,” he added. “Additionally, the tariffs may also disrupt supply chains, leading to delays in material delivery and impacting project timelines and completion dates.”
Lots of known unknowns
Despite his unpredictable wild card reputation, there are rays of hope that President Trump understands that he may need to moderate his approach at times.
Oxford Economics’ Chief US Economist Ryan Sweet said: “One of the most important things from an economic policy perspective is that the Trump administration has to continue to ride and nurture a wave of productivity growth in the US. Hopefully among some of his economic advisors cooler heads will prevail and prevent rolling back things that are going to hurt productivity growth.
“The stock market and the economy are Trump’s barometer of policy success. He’s not going to do things to tank the market or the economy. That’s why he’s mostly going to phase in tariffs. He’s not going to want to undermine either of those because the market doesn’t like tariffs or an economy that’s struggling.
“In the end, that’s going to win the day, and will probably shape his economic agenda more than people think.”
Despite the early flurry of activity from the Trump 2.0 White House, there remains plenty of known unknowns for America, for us in the UK and for the construction industry.
Paul Groves is Group Editor for Specification
