Navigating Tariffs and Rising Costs in 2025

How Construction Firms Can Overcome Tariffs and Rising Costs in 2025

The construction industry is facing a new wave of financial pressure. Material costs are rising, supply chain disruptions remain unpredictable, and new tariffs on key building materials could escalate expenses even further.

For contractors and construction firms already operating on razor-thin margins, these challenges demand a smarter approach to cost management. Firms that embrace cloud-based financial and operational solutions will be best equipped to maintain profitability, ensure compliance, and stay competitive in a volatile market.

The Impact of Tariffs on Construction Costs
With discussions of increased tariffs under the U.S. administration in 2025, construction companies must prepare for higher costs on essential building materials.

• • Steel & Aluminum: These materials are foundational to construction, from structural framing to roofing. The existing 25% tariff on steel and 10% on aluminum—originally imposed under Section 232—has already led to price spikes. If tariffs are expanded, steel and aluminum costs could surge even higher. (1 - Source: U.S. Department of Commerce, 2024)
  • Lumber: Nearly 70% of the softwood lumber used in U.S. construction is imported from Canada, where tariffs have already contributed to market instability. Lumber prices jumped over 35% during previous tariff hikes, directly impacting residential and commercial construction. (2 -Source: National Association of Home Builders, 2024)
  • Concrete & Roofing Supplies: Many cement and asphalt products depend on imported raw materials. The price of concrete rose 13% in just two years, driven by supply chain constraints and increasing import costs. (3 -Source: U.S. Bureau of Labor Statistics, 2024)
  • Housing Affordability and Market Impact: Tariffs on imports from Canada, Mexico, and China are expected to raise construction costs significantly—potentially increasing new home prices by 5% to 20% in affected regions such as the Bay Area. This price pressure is already affecting home construction companies and contributing to declines in their stock prices. (4 - Source: Industry News)
  • Historical analysis also reminds us that while tariff measures may be temporary, their lasting impact on material costs can reduce competitiveness and even lead to job losses over time. (5 - Source: Economic Analysis)

What does this mean for construction firms?
Projects risk running over budget without a real time view of costs and margins, cutting into already thin profit margins.

The Urgency of Advanced Cost Management
Too many construction firms still rely on manual spreadsheets and outdated accounting systems. In today’s market, these inefficiencies can lead to delayed financial reporting, budgeting errors, and compliance risks.

A modern, cloud-based ERP system eliminates these risks by providing:

• • Real-Time Job Costing – Track material, labor, and overhead costs as they happen to prevent budget overruns.
  • Automated Financial Management – Replace spreadsheets with an integrated invoicing, payments, and compliance tracking system.
  • Remote Accessibility – Access financial and operational data from anywhere—in the office or on-site.
  • Change Order Tracking – Prevent surprise expenses by managing change orders with structured approval workflows.

Selecting the Right ERP Solution for Construction
Not all ERP systems are built for construction.
The right solution should offer:

• • Construction-Specific Accounting – Support for AIA billing, retainage tracking, and tax compliance.
  • Project Budgeting & Forecasting – Real-time tracking of costs, schedules, and job performance.
  • Subcontractor & Vendor Management – Efficient contract, payment, and change order management to avoid disputes.
  • Advanced Reporting & Analytics – Data-driven insights to help project managers make informed financial decisions.

NetSuite + FullClarity: The Smartest Investment for Construction Firms
NetSuite + FullClarity's Construction for NetSuite offers a construction-specific ERP solution that helps control costs, track real-time financials, and improve efficiency for firms looking to modernize their financial and project management systems.

• • Real-Time Job Costing & WIP Reporting – Get instant visibility into project profitability and work-in-progress (WIP) reports.
  • Automated Billing & Subcontractor Management – Simplify payments, retainage tracking, and approvals with structured workflows.
  • Seamless Cloud Access – Access financial data securely from any device, improving team collaboration.

Why Construction Firms Must Act Now
Tariffs and supply chain disruptions aren’t going away—and firms that fail to adapt will fall behind. Investing in NetSuite + FullClarity enables construction firms to:

• • Control material costs and avoid budget overruns
  • Gain complete visibility into financial performance across multiple projects
  • Ensure compliance with industry-specific accounting regulations
  • Future-proof against ongoing economic volatility

Conclusion
The financial landscape in construction is evolving rapidly. With tariffs driving up material costs and supply chain disruptions remaining a constant challenge, modernizing your financial systems is not just a good idea—it’s a necessity.

NetSuite + FullClarity equips construction firms with the tools they need to track costs accurately, manage financials effectively, and make informed decisions in real time. This investment in advanced technology is your best defense against the economic uncertainties ahead.

Act now to secure a competitive edge and ensure your projects remain profitable.
For more information on how NetSuite + FullClarity can transform your operations, visit FullClarity.com