Tariffs on construction materials have been rising steadily, putting significant pressure on contractors and trades. Higher material costs can quickly erode profit margins, delay projects, and even lead to disputes over unexpected price increases. To survive and thrive despite these challenges, contractors need proactive strategies to mitigate the impact of tariffs on their businesses.
Here are a few practical steps to help safeguard your profits and maintain project timelines:
1. Lock in Prices Early with Suppliers
Negotiate fixed-price contracts or request price protection clauses during the pre-construction phase. Establishing strong, long-term supplier relationships can also provide early warnings about cost increases.
2. Include Escalation Clauses in Contracts
Escalation clauses allow contractors to adjust contract pricing if material costs rise beyond a certain threshold. Including these clauses helps protect margins while maintaining transparency with clients.
3. Buy in Bulk or Pre-Purchase Key Materials
Where feasible, pre-purchasing essential materials—especially those susceptible to tariff increases—can lock in current pricing and ensure availability for future projects.
4. Diversify Suppliers and Sources
Expanding your supplier network and exploring alternative materials sourced from tariff-free regions can help reduce risk and cost pressures.
5. Review and Update Contracts Regularly
It’s critical to review standard contracts to ensure they include updated language around force majeure events, material price escalation, and change order procedures.
6. Communicate Early and Transparently with Clients
Keeping clients informed about material cost risks early in the proposal stage builds trust and prepares them for any necessary adjustments down the line.
7. Engage with Industry Trade Groups
Joining trade organizations can amplify contractors’ voices in advocating for tariff exemptions and other beneficial policies at local and national levels.
Rising tariffs present real challenges, but by implementing these proactive strategies, contractors can better protect their profit margins and keep projects running smoothly.
For more insights and resources to support your business success, visit: www.nathanwechsler.com
Please visit Skepsis Legal Solutions to read more: How Contractors and Trades Can Protect Themselves from Increasing Tariffs – Skepsis Legal Solutions