Update as of April 10, 10:00am: Even with yesterday’s pause, Basu says the effective tariff rate on U.S. imports is lower than it was Wednesday morning, but is still higher than what was originally announced on April 2, “because America imports so much from China.”
However, that estimate doesn’t account for how many Chinese goods will be routed through other countries. Basu says, “No one really knows the extent to which that’s feasible or what it will cost, but it will lower the effective tariff rate. That, along with the increased uncertainty of the 90-day pause and the notion that rates are now looking even higher for even longer, means a lot of the initial analysis below probably holds.”
SEE ALSO: PROTECTING AGAINST THE IMPACT OF 2025 TARIFFS ON CONSTRUCTION COSTS
During Construction Executive’s Q1 Construction Economic Update and Forecast webinar on April 2, 2025, Anirban Basu, chief economist for Associated Builders and Contractors, said, “This economy is set to slow. It was set to slow even before all this talk about tariffs.” He reveals some of the trends economists have been seeing over the last three months in the construction industry and predicts how the April 2 rollout of tariffs will further impact the industry.
Below is a roundup of quotes, poll results and top takeaways:
ON TARIFFS AND INFLATION
- On the Fed’s 2% inflation rate goal: “We’re not there yet. We’re not getting closer to 2%, we’re stuck and now here come tariffs.”
- “On top of [the tariffs on Canada and Mexico], you have tariffs on steel and aluminum, and they’re stackable.”
- “Today the talk is about reciprocal tariffs. As an economist, we generally don’t love tariffs, but I think that reciprocal tariffs, at least conceptually, are quite brilliant. This might be a mechanism to lower tariffs against U.S. exports.”
- “Because we don’t have Q1 data (the Atlanta Fed GDPNow estimates -3.7%for 2025 Q1), it is conceivable that recession has already begun in America.”
ON LABOR AND MARKETS GROWTH AND FEARS
- “It is still the case we have more job openings than unemployed people.”
- “We’ve got real earnings growth in America. It’s important for hiring to continue [for those earnings to continue to grow].”
- “Houston is going to boom. It is home to America’s technology capital. And it is so focused on energy. So much of the engineering talent that undergirds the industry is in the Houston metropolitan area.”
- “Manufacturing is coming back to America; the supply chain’s coming back home.”
- “Some unemployment rates are no longer that low.”
- “Credit-card debt, credit-card delinquency, automobile-payment delinquency is up.”
- Considering office vacancy rates: “The value of the collateral is collapsing.”
- “Foreclosures are up.”
- “Why are multifamily building permits falling? Because, increasingly, contractors are having a harder time gaining project financing.”
- “The power segment is set to explode.”
POLLS
Which of these is the leading challenge for your company today:
- Supply chain and/or materials issues
April 2025: 16%
Dec. 2024: 6% - Skills / worker shortage
April 2025: 50%
Dec. 2024: 52% - Insufficient demand for construction services
April 205: 12%
Dec. 2024: 15% - Availability of financing for projects/project work
April 2025: 7%
Dec. 2024: 19% - None of the above
April 2025: 6%
Dec. 2024: 6%
The worker shortage was the runaway winner, but supply chain climbed 10 percentage points from December 2024.
Over the last three months, how has your company’s backlog fared:
- It has risen considerably
April 2025: 12%
Dec. 2024: 12% - It has risen slightly
April 2025: 26%
Dec. 2024: 27% - It has remained about the same
April 2025: 30%
Dec. 2024: 26% - It has declined slightly
April 2025: 26%
Dec. 2024: 27% - It has declined considerably
April 2025: 6%
Dec. 2024: 8%
Basu says, “Statistically speaking, these polls are the same. All the talk of tariffs has changed the outlook of the industry not at all. That is pretty impressive.”
Where do you expect your company’s margins to be a year from now:
- Substantially higher
April 2025: 3%
Dec. 2024: 6% - Slightly higher
April 2025: 25%
Dec. 2024: 34% - About the same
April 2025: 37%
Dec. 2024: 34% - Slightly lower
April 2025: 31%
Dec. 2024: 22% - Substantially lower
April 2025: 4%
Dec. 2024: 5%
Margins are down because, while backlog remains relatively the same, costs are higher due to tariffs.
TAKEAWAYS
While there are some optimistic outlooks—the southeast region is booming, as are the power and technology sector—other signals instill pessimistic precaution: debt and foreclosures are on the rise, and Midwest region and automobile and manufacturing sectors set to take a big economic hit. As the U.S. economy braces for impact after a sweeping set of reciprocal tariffs, consumers distracted from the fact that recession may have already taken its seat at the table.
SEE ALSO: CONSTRUCTION FUTURES: MARCH 2025 ECONOMIC ROUNDUP
