Tariff Construction
Cost Calculator

Four tariff regimes dominate construction cost impacts in 2026: Section 232 Steel & Aluminum tariffs (25%) affect structural steel, rebar, beams, pipes, and HVAC equipment. Canadian Softwood Lumber duties (~23% combined) affect framing lumber for residential and light commercial projects. Section 301 China tariffs (7.5–25%) affect electrical components, wiring, panels, switchgear, and lighting fixtures. A newer universal 10% baseline tariff on most imports adds incremental cost across the supply chain. The combination pushes aggregate construction costs up approximately 8% vs. pre-tariff baseline (Oxford Economics, 2026).

Franchise buildouts face a unique exposure profile. The structural shell (steel, lumber, concrete) sees similar impacts to commercial construction — roughly 6–9% on steel-heavy builds. However, franchise buildouts also include a larger proportion of imported fixtures, equipment, and branded millwork, much of which sources from China or other tariffed countries. Kitchen equipment, display fixtures, and custom furniture can face Section 301 tariffs of 7.5–25%. In practice, many franchise operators are reporting total project cost overruns of 8–12% versus pre-tariff estimates, depending on their equipment package.

A Federal Circuit tariff challenge proceeding was scheduled for oral arguments on or around March 2026. The case challenges the executive authority underlying some Section 301 tariff actions. A ruling has not yet been issued. If the court rules against the current tariff structure, some rates could be reduced or eliminated — but enforcement mechanisms and a potential administration appeal could delay any relief by 6–18 months. Contractors and developers should budget at current tariff rates and treat any rate reduction as upside rather than an assumption. Verify current case status via PACER (pacer.gov) or the Federal Circuit's official docket.

Five strategies are working in practice: 1) Domestic sourcing: U.S.-made steel and aluminum are exempt from Section 232; domestic lumber avoids Canadian duty. 2) Material substitution: Engineered wood products and pre-cast concrete can replace steel in some structural applications. 3) Early procurement: Locking in materials now avoids future rate increases pending court ruling outcomes. 4) Tariff exclusion requests: Some products qualify for Section 301 exclusions — worth checking via USTR's portal. 5) Contract escalation clauses: Include tariff-adjustment provisions in GC contracts to share cost risk if rates change during a long project timeline.

No. Lumber tariffs are administered separately from Section 232. The U.S. applies countervailing duties (CVD) of approximately 14.5% and anti-dumping duties (ADD) of approximately 8.5% on Canadian softwood lumber — the source of ~90% of U.S. lumber imports — for a combined rate of roughly 23%. These are determined by Commerce Department investigations under different legal authority than the national security-based Section 232. Lumber rates have historically been more variable and subject to USMCA trade negotiations. Current duties are in place through at least mid-2026 pending the next administrative review.