Blueprints for Success: Protecting Your Construction Business Amid Growing Trade Tensions with China

As trade tensions between the United States and China continue to escalate, the construction industry faces rising material costs, supply chain disruptions, and increased economic uncertainty. As of April 9, 2025, the U.S. imposed a 125 percent tariff on Chinese imports. In response, China raised its duties on U.S. goods to 84 percent, further driving up costs and impacting your bottom line.

While international politics are beyond your control, proactive planning can help mitigate the effects of tariff-related disruptions and help maintain healthy profit margins.

Understand Vulnerabilities Amid Trade Tensions

The ongoing trade disruptions between the United States and China may disrupt global trade flows, leading other key markets such as Canada, the European Union, and Southeast Asia to start new discussions with the United States. Construction companies must remain agile, as these shifts could alter sourcing options and require quick adaptation to new trade policies.

You should monitor price increases beyond typical market fluctuations if you rely on imported materials. This proactive approach will help ensure you have accounted for potential cost changes in your bids and better manage tariff-related challenges.

Lock in Material Costs Early

Trade tensions may drive up material costs for critical construction items such as aluminum, cabinetry, electrical components, HVAC systems, lighting, plumbing fixtures, rebar, specialized mechanical systems, steel, and wiring. Builders could face higher procurement costs, thinner profit margins, or unforeseen budget overruns as vendors pass on these higher costs.

Lock in material pricing with vendors during contract negotiations to ensure cost certainty and strengthen your bidding strategy. For longer projects, incorporate contingencies and escalation clauses to adjust for input cost shifts. Additionally, negotiate clauses to protect against unexpected import surcharges or pass-through tariff increases. These proactive steps help stabilize budgets and avoid surprises.

Diversify Supply Chains

The ongoing tariff situation is creating volatility in the global supply chain, leading to shipping delays, customs hold-ups, backorders from Chinese manufacturers, and domestic shortages—all of which may result in construction delays. As a result, many construction companies are exploring alternative sourcing methods, though these may come with higher costs and longer lead times.

Diversify your suppliers by building relationships with multiple vendors, including domestic sources. This strategy can help mitigate shipping delays, lower shipping costs, and protect against tariffs that disrupt availability, ultimately stabilizing procurement timelines.

Rethink Contract Structures

With market volatility on the rise, many construction companies find fixed-price contracts increasingly risky. As a result, these companies are incorporating escalation clauses, contingency pricing, and more flexible contract terms to account for potential price fluctuations.

Work with your legal team to ensure contracts reflect these adjustments and include provisions for price changes due to tariffs or unforeseen circumstances.

Monitor Cash Flow More Aggressively

Tariff-related delays and material price increases can strain working capital. Create a rolling 12-month cash flow forecast that accounts for worst-case scenarios, enabling you to identify potential cash pinch points early and secure financing before it becomes urgent. Developing flexible cash flow models will help you navigate supply chain shocks and stay resilient through unpredictable conditions.

Use Tax Strategy to Offset Costs

Proactive tax planning can help ease financial pressure during times of uncertainty. Strategies such as accelerated depreciation, Section 179, bonus depreciation, R&D tax credits, cost segregation, and inventory tax planning can recover cash flow and improve profitability. Since every construction company is unique, customizing these strategies to align with your specific project pipeline is key to navigating financial uncertainties.

Experts in Construction Advisory Services

Whether it is locking in material pricing, diversifying supply chains, or adjusting contracts, we can help you create financial strategies that protect your profits. As one of the Top 50 Construction Accounting Firms in the United States (Construction Executive 2021, 2022, 2023, and 2024), we build long-term, value-added relationships and provide solid solutions that help positively impact your construction business. With over 67 years of leadership, experience, and expertise, our talented team of CPAs and advisors fully understand the nuances of the construction industry and provide resources beyond the traditional audit, accounting, and tax services to construction businesses throughout the country, with revenues ranging from $5 million to $500 million.

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