COSTS ACCELERATE AGAIN IN JULY FOR NONRESIDENTIAL CONSTRUCTION MATERIALS AS TARIFF DRIVE UP PRICES FOR ALUMINUM, STEEL, AND COPPER ITEMS

Largest Increase in Two and a Half Years Comes as Construction Officials Urge Administration to Finalize Negotiations with Key Trading Partners to Ease Punitive Tariffs Levels that Went into Effect This Year

News Release from Associated General Contractors of America, Aug 14, 2025

The producer price index for materials and services used in nonresidential construction rose 0.5 percent in July and 2.6 percent from July 2024, the largest 12-month increase since February 2023, according to an analysis by the Associated General Contractors of America of government data released today. Association officials urged the Trump administration to quickly resolve outstanding trade negotiations and ease the punitive tariff levels put in place with many U.S. trading partners.

“Steep tariff increases earlier this year on aluminum and steel, along with a more recent tariff on raw copper, drove the producer price index for construction inputs higher for the third-straight month,” said Ken Simonson, the association’s chief economist. “Even though contractors do not generally import materials directly, it is clear that domestic producers are raising prices in line with the protection tariffs are providing them.”

Simonson noted that tariffs on steel and aluminum were hiked to 50 percent on July 4 from the 25 percent rate that took effect on March 12, while a 50 percent tariff on raw copper took effect on August1. In addition, tariffs on most imports from almost all the nations that supply vital construction materials took effect in early August, making further increases in construction costs likely over the next few months.

Three major construction inputs contributed to the acceleration in year-over-year costs. The producer price index for aluminum mill shapes jumped 7.4 percent last month and 13.7 percent from July 2024. The index for steel mill products slipped 0.5 percent in July but still climbed by 8.8 percent over 12 months. The index for copper and brass mill shapes rose 5.7 percent for the month and 6.9 percent year-over-year.

Association officials said contractors were being squeezed by rising materials prices at a time when demand for some private-sector projects has slackened amid higher interest rates and market uncertainty. They noted that finalizing trade deals and lowering tariffs rates would help ease some of the market uncertainty and rising materials prices that are having an impact on the construction sector.

“This administration has acted quickly to craft trade agreements with many trading partners, but several outstanding deals are leaving contractors saddled with higher materials prices as tariff levels remain high,” said Jeffrey D. Shoaf, the chief executive officer of the Associated General Contractors of America. “This administration can help address higher materials prices and broader market uncertainty by quickly finalizing remaining trade negotiations.”

View producer price index data.

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