How Steel and Aluminum Tariffs will Impact Mid- and High- Rise Construction
In September 2025, U.S. policymakers imposed 25% tariffs on imported steel and aluminum, reshaping the landscape for developers and contractors across the country. While tariffs are often framed as a tool to strengthen domestic industry, their ripple effects are being felt immediately in construction—particularly in the multifamily sector where mid- and high-rise buildings rely heavily on these materials.
Why Steel and Aluminum Matter in Multifamily Development
Steel and aluminum are the backbone of modern urban development.
Structural systems: Mid- and high-rise buildings depend on steel framing for strength, durability, and flexibility.
Curtain walls and facades: Aluminum dominates window frames, cladding systems, and glazing—critical elements for design and energy efficiency.
Mechanical and electrical systems: Both materials are essential in HVAC, plumbing, and electrical infrastructure.
Even modest price shifts can reverberate through a project’s pro forma. A 25% tariff is not modest—it’s a seismic cost driver.
Immediate Cost Pressures
According to recent construction cost indices, tariffs are projected to raise steel prices by 10–15% and aluminum by 8–12% in the near term. For a 25-story multifamily tower, that could translate into millions in added costs, depending on the structure and façade design.
Developers face three immediate challenges:
Budget strain: Projects underwritten with pre-tariff assumptions may now be underwater.
Financing delays: Lenders are reevaluating risk on deals that suddenly show thinner margins.
Bid volatility: Contractors are passing along material escalation risk, making pricing less predictable.
Long-Term Market Effects
Project delays and cancellations: Some planned high-rises may stall as developers wait for clarity or attempt to renegotiate with investors.
Rent pressures: To recoup higher construction costs, developers may need to push rents upward—though market demand and affordability concerns could limit increases.
Shift to alternatives: Expect greater interest in mass timber for mid-rise construction, hybrid systems that reduce steel usage, and value-engineering to minimize aluminum-heavy design features.
Who Stands to Benefit
While tariffs are challenging for builders, U.S. steel and aluminum producers could see stronger demand, potentially spurring domestic capacity growth. However, ramping up production takes time—and in the short run, supply bottlenecks may worsen before stabilizing.
Strategies Developers Can Use
Forward-looking multifamily developers are already exploring ways to soften the impact:
Early procurement: Locking in steel and aluminum orders before further escalations.
Alternative materials: Mass timber, precast concrete, and composites are becoming more attractive for mid-rise projects.
Design innovation: Simplified façade systems, modular prefabrication, and mixed-material strategies can reduce reliance on tariffed imports.
Collaboration with lenders: Updating underwriting models to reflect higher hard costs and renegotiating terms where feasible.
Bottom Line
Tariffs on steel and aluminum are adding fuel to an already complex construction environment of elevated interest rates, rising labor costs, and zoning reforms. For multifamily developers, the key is adaptability—pivoting designs, procurement strategies, and financing models to weather short-term turbulence while staying competitive in the long term.
In the end, those who can creatively balance cost control, material flexibility, and tenant demand will be best positioned to thrive in the post-tariff era.
