Effective trade depends on strong physical infrastructure. But the converse is also true: the ability to build many forms of infrastructure depends on imported materials.
For the last several decades, relatively open trade has characterized the global economic order, allowing for a more efficient allocation of goods and greater prosperity for most countries. Over the past decade, however, trade policy in the United States has shifted, with 2025 marking a significant departure. The second Trump administration has implemented a broad set of import taxes on goods across the world. As of this writing, the current levies include 50 percent on steel and aluminum, 25 percent on critical minerals, and 14.54 percent on Canadian softwood lumber, all in addition to a baseline 10 percent tariff on all products.
Tariffs (or import taxes) are a polarizing issue on multiple fronts. But generally, they raise import prices and thus reduce the supply of the tariffed items in the short term. When these imported items are inputs for infrastructure, like those described above, they can constrain supply and make life hard on industry leaders who depend on them.
When steel and aluminum were initially tariffed, media discourse often focused on the auto industry. However, both minerals are used in countless types of infrastructure we rarely consider. Steel provides structural strength in buildings, bridges, and transit systems, while aluminum offers lightweight, corrosion-resistant solutions for components like facades, window frames, power lines, solar panel mounts, and railcar bodies. In 2024, the U.S. had a net import reliance of 13 percent for steel, while its reliance on imported aluminum was significantly higher, at nearly half of total consumption.
Softwood lumber is a fundamental material in both residential and non-residential construction, used for framing, sheathing, flooring, and various temporary supports and maintenance projects in infrastructure. The U.S. has imported more lumber than it has exported since 2016, and Canada is often cited as being responsible for 70 to 85 percent of those imports. The U.S. could likely produce sufficient lumber domestically to meet its needs, but doing so would demand substantial efforts from the industries involved.
Critical minerals such as lithium, cobalt, nickel, and graphite are crucial components for high-efficiency lithium-ion batteries used in electric vehicles and energy storage systems. Rare earth elements – those 15 or so hard-to-pronounce metals mostly found in the lanthanide row of the periodic table – are essential for permanent magnets found in wind turbines and EV motors. As it stands, according to the U.S. Geological Survey Mineral Commodity Summaries, the United States is heavily reliant on imports for these materials, importing 80 percent of rare earth elements, 100 percent of gallium and natural graphite, and 48 percent to 76 percent of lithium, nickel, and cobalt.
The implications that trade policy has for residential and non-residential. construction have not gone unnoticed. On February 11, 2025, a coalition led by Rep. Jim Costa sent a letter to President Trump expressing deep concern over rising construction costs. Industry leaders voiced similar warnings even earlier in some cases. The National Association of Home Builders sent a letter to the White House voicing similar concerns and urgency. Without an oracle, it is hard to precisely predict the full long-term impact of tariffs. But the general expectation is that increased import costs are at least partially passed through to downstream industries, potentially hurting those involved in building construction.
Unstable trade policy is bad for business, critically in the infrastructure and construction sectors. Firms are reluctant to commit to large projects when the prices of key building materials remain unpredictable, and this is especially problematic for a country facing a housing shortage and aging public works on a national scale.
To make infrastructure-related supply chains more resilient, industry leaders must pursue proactive strategies.
The most direct way to mitigate shortages or sudden price spikes is to broaden the portfolio of suppliers and materials. By expanding sourcing options, firms can reduce their exposure to supply shocks and lower the risk premium on capital investment.
It may be quicker and simpler to award contracts based on the lowest bid, but businesses might benefit from a more holistic approach to purchasing and supply chain management, one that also focuses on long-term supplier relationships, risk mitigation, and continuous improvement.
Fluctuations in construction costs resulting from trade policy are painful for existing contracts, especially fixed-costs ones. Businesses can insulate their contracts from external harm by incorporating aspects such as substitution clauses, change-in-law provisions, and material price escalation clauses.
In the long term, investing in research and development for sustainable materials and new manufacturing techniques can potentially yield benefits. If a business can determine how to produce more using fewer resources, it will be better positioned to withstand the impact of tariffs.
Embracing technology has long made U.S. firms more productive and efficient. Advanced supply chain management software and AI-powered analytics can improve bid accuracy, streamline procurement, and enable more agile decision-making in rapidly changing markets.
- Maintain Proactive Communication and Advocacy
Industry associations and individual firms must remain engaged in policy discussions and advocate forcefully for infrastructure priorities. The strength and resilience of our nation’s infrastructure is worth fighting for.
Trade policy is complex and reflects many competing priorities. But from an infrastructure perspective, any measures that restrict the availability of building materials should be weighed with particular care. Ultimately, it is up to policymakers to balance these competing interests, but the urgency of maintaining and expanding the nation’s infrastructure must not be overlooked.
Written by Jackson Murray, Public Policy Intern
The Alliance for Innovation and Infrastructure (Aii) is an independent, national research and educational organization working to advance innovation across industry and public policy. The only nationwide public policy think tank dedicated to infrastructure, Aii explores the intersection of economics, law, and public policy in the areas of climate, damage prevention, eminent domain, energy, infrastructure, innovation, technology, and transportation.