Navigating Trump-Era Policies in Construction Contracts and Project Delivery

From streamlining permitting processes and rolling back environmental regulations to imposing tariffs on essential materials and altering labor policies, the Trump administration’s 2025 directives are creating both opportunities and challenges for contractors nationwide. Western Pennsylvania, with its historical industrial base and growing infrastructure demands, has experienced significant ramifications from the Trump administration’s 2025 executive orders and policies. In light of these directives, it is imperative that your construction contracts and project delivery plan for the allocation of risk resulting from the current climate of regulatory and economic uncertainty. Tariffs on Construction Materials and Equipment The Trump administration has implemented a series of tariffs that are anticipated to have significant implications for contractors and the construction industry as a whole. Below is a chronological overview of key tariff developments:

• February 1, 2025: President Trump issued three executive orders which imposed tariffs on most goods imported from Canada (25%), Mexico (25%), and China (additional 10%). A 10% tariff specifically targeted Canadian oil and gas imports.
• March 12, 2025: Per Proclamation No. 10896, a 25% tariff was imposed on all steel, aluminum, and derivative products.
• April 3, 2025: Per Proclamation No. 10908, a 25% tariff was imposed on automobiles. Tariffs on automobile parts delayed to no later than May 3, 2025.
• April 5, 2025: Executive Order 14259 went into effect, including a 10% universal tariff imposed on all imported goods to the US and reciprocal tariffs on 57 countries. An April 11 memorandum from the White House clarified that smartphones and other consumer electronics that contain semiconductors are exempted from these tariffs.
• April 10, 2025: There was a 90-day suspension on reciprocal tariffs on 56 nations, except for those on Chinese imports, which faced a 125% retaliatory tariff.
• April 22, 2025: Secretary of Commerce launched a national security investigation under Section 232 of the Trade Expansion Act of 1962 to determine whether imports of medium and heavy-duty trucks, along with related parts and products, may compromise U.S. national security.
• April 29, 2025: Executive Order “Addressing Certain Tariffs on Imported Articles” was issued to prevent overlapping (“stacked”) tariffs on certain imported goods—such as automobiles, steel, aluminum, and items affected by border-related duties—by ensuring that only one applicable tariff is imposed, thereby reducing cumulative tariff burdens on U.S. importers.
• April 29, 2025: An amendment to Proclamation 10908 was issued to provide temporary relief for U.S. automakers. The amendment offers credits to manufacturers assembling vehicles in the United States, allowing them to offset a portion of the 25% tariffs on imported automobile parts. Specifically, eligible automakers can receive a credit equal to 3.75% of a vehicle’s value in the first year and 2.5% in the second year.

U.S. tariff policies are evolving rapidly, and the construction industry is navigating a complex landscape shaped by these tariffs. While the intention behind the tariffs, among other things, is to bolster the growth of domestic industries, the immediate effects will likely result in increased costs, project delays, and project uncertainties. Contractors should adopt proactive measures in their contracts and project delivery to manage these challenges effectively. Here’s how:

1. Material Escalation. Material escalation clauses in construction contracts will serve as a valuable risk management tool in the face of unpredictable tariffs and fluctuating material costs.
2. Schedules. Detailed procurement schedules and early ordering of long-lead items can help mitigate delays by ensuring critical materials are sourced as early as possible. Project stakeholders should evaluate storage issues, including payment, availability, and insurance coverage, prior to placing early orders for materials or equipment.
3. Force Majeure. Force majeure or excusable delay clauses that specifically reference tariff-related disruptions can protect contractors. Careful attention should be placed on responsibility for increased costs and delays.
4. Substitution. Substitution clauses should be added to allow flexibility in replacing unavailable or unaffordable materials due to tariffs. Such clause should require compensation for the increased costs of substituted materials and equipment.
5. Contingency. Contingency provisions can provide financial buffers for cost increases tied to sourcing changes, escalation, and delays.
6. Communication. Early and frequent communication with project owners can help mitigate damages. Documentation on supplier updates and delays helps support requests for time extensions or change orders, ensuring projects remain on track despite these external trade challenges.

Labor and Immigration Directives Continuing a hardline stance on immigration, the Trump administration introduced new restrictions that affect labor availability in the construction sector. The administration’s intensified immigration enforcement, including increased Immigration and Customs Enforcement (ICE) raids and deportations, has led to heightened fear among undocumented workers. This environment has resulted in absenteeism and reluctance to seek employment, further straining the labor pool. The construction industry already faces a significant labor shortage, and the administration’s restrictive immigration policies threaten to worsen this shortage, potentially leading to increased wages and project delays. Policy Shifts Affecting Federal Contractors On January 21, 2025, the Trump administration issued Executive Order 14173, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” rescinding Executive Order 11246. Executive Order 14173 eliminates the requirement for federal contractors to maintain affirmative action programs for women and minorities. This rollback reshapes hiring practices across the construction sector, particularly for firms with federal contracts. While some welcome the change as a return to merit-based hiring, others have voiced concerns about potential discrimination and reduced workforce diversity. Executive Order 14173 also raises concerns regarding the future of disadvantaged business enterprise (DBE) programs. Although Executive Order 14173 does not explicitly dismantle DBE programs, its broad directives against certain DEI initiatives introduce uncertainty about the future of such programs. Moreover, grant recipients and federal contractors may risk losing federal funding if they do not comply with Executive Order 14173. Notably, Executive Order 14173 mandates that grant recipients certify they do not operate programs promoting DEI initiatives that violate federal anti-discrimination laws. Of similar risk and concern to federal contractors is the cancellation of government contracts. The Department of Government Efficiency (DOGE), led by Elon Musk, has undertaken a broad effort to reduce federal expenditures by canceling numerous contracts across federal agencies. Stakeholders involved in federal contracting should closely monitor legal developments and agency guidance to navigate the evolving compliance landscape. With heightened immigration enforcement, restrictions on DEI initiatives, and a focus on the reduction of federal expenditures, contractors must build flexibility and foresight directly into their construction contracts and project delivery. Here’s how:

1. Labor Shortages and Delay Clauses. Contractors should include force majeure or excusable delay clauses that specifically reference labor shortages tied to government policy changes or immigration enforcement to protect against project delays due to factors beyond the contractor’s control.
2. Flexible Scheduling. By incorporating grace periods for completion and/or adjustable milestones, contractors can accommodate unforeseen workforce gaps and prevent liability for delays. Clearly defining labor availability as a “critical resource” ensures the project schedule can legally adapt to market conditions or political shifts.
3. Subcontractor Compliance and Worker Verification. Contractors should require subcontractors to verify employment eligibility and should require subcontractors to mandate the same from sub-subcontractors and suppliers. Doing so not only ensures legal compliance but also reduces liability stemming from undocumented labor issues.
4. Contingency Budgeting for Labor. Adding a contingency for labor cost overruns due to government policy changes and immigration enforcement provides financial room to cover overtime, additional recruitment, or higher costs for alternate labor solutions.
5. Termination. Including termination for convenience language in all downstream contracts with subcontractors and suppliers protects against the risk of unforeseen contract cancellations. This type of provision is especially important for those in government contracting.

Navigating the construction industry under rapidly evolving tariffs, tightening immigration rules, and fluctuating labor availability requires more than operational adjustments — it demands smart, resilient contract language. By embedding these strategies into your contracts, you can protect your business and foster a more collaborative, realistic project environment amid ongoing policy shifts.

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This article was published in the May/June issue of BreakingGround Magazine. Read full publication here.