A burst of optimism rippled through the construction world last week when copper prices plunged nearly 22%.
President Donald Trump had just spared raw copper from tariffs, surprising markets that had been bracing for broader restrictions.
For a moment, real estate developers exhaled. Then came the fine print.
On Friday, the White House slapped a 50% tariff on finished copper goods — the pipes, wires and fittings critical to U.S. construction.
Bisnow/created with assistance from ChatGPT
Copper tariffs are expected to significantly impact construction material prices.
That distinction matters.
While spot prices for raw copper dropped to $4.33 per pound, the tariff doesn’t touch the raw metal. And pricing for the value-added copper products builders actually use has jumped 40% in some cases just this year.
That strikes the guts of every jobsite from San Francisco to Washington, D.C., where even minor cost spikes can blow through contingency budgets and punch holes in pro formas, the financial blueprints developers rely on to test feasibility and ensure returns.
Developers and construction experts who spoke to Bisnow this week said they are already battling labor costs, soaring insurance expenses and higher-for-longer interest rates, and the new copper duties pile on additional financial friction just as hopes were rising for price stability.
“It’s just one more factor to keep in mind,” said Greg Kraut, a New York developer and CEO of KPG Funds. “When ‘Liberation Day’ hit, we couldn’t sell any of the buildings we wanted to because no one knew how to model for tariffs. Now, with rising material costs and volatility, it’s the same story — and I guess that now includes copper, too.”
The Fine Print That Packs A Punch
The new duty stems from a Section 232 investigation launched in February, which deemed U.S. reliance on foreign copper — particularly from Chile, Canada and Mexico, which combined shipped the U.S. more than $10B worth in 2024 — a national security threat.
The 50% tariff effective Aug. 1 applies to semifinished copper goods and derivatives, stacking atop existing tariffs. Commerce Secretary Howard Lutnick has 90 days to review whether more copper-based imports should be included under the Trump administration’s trade initiative.
About 84% of the intermediate copper products used in U.S. construction — including rolled, drawn, extruded and alloyed components — are already sourced domestically, according to internal JLL estimates shared with Bisnow. While that may blunt the immediate impact, analysts expect demand-driven pressure to ripple through the supply chain as buyers shift away from imports.
Prices for copper products have already spiked 15% to 30% over the past year as builders anticipated tariffs, said Dan Doherty, senior director of estimating at Shawmut Design and Construction. That includes a 40% surge in common diameters of copper pipe and a 14% to 17% increase for copper wires since the start of 2025, according to a Skanska report.
That is only going to get worse with the new liens, spurring builders to get creative.
“Suppliers have built inventory and adjusted pricing … [and] where permitted, we’re using cost-effective alternatives like plastic plumbing pipe in multifamily projects and aluminum electrical wiring in commercial projects,” Doherty said.
But those substitutions have limits.
In healthcare, data centers and food service — where conductivity, fire resistance and durability are nonnegotiable — copper is difficult to replace. Even in projects that pivot to alternatives, HVAC systems, fixtures and sensors still rely on embedded copper, keeping cost exposure high.
When Fixed Prices Break
To hedge against volatility, Florida Construction Specialists stopped offering fixed-price contracts after the pandemic.
“We don’t give you a fixed price and lock ourselves in,” co-founder Frank Bragano said. “No way, Jose. It’s cost-plus, period. It’s too fluctuating. I don’t have a crystal ball, and I’m not taking the gamble.”
He is in talks with HVAC and electrical subcontractors about pricing on an $11M project in central Florida, but the impact of the copper tariff on that budget remains unclear.
Who will ultimately foot the bill is less hazy.
“I get the tariffs, I understand the theory behind it, but does the consumer get a raise?” Bragano said.
“The tariffs will affect those components, which will get passed on to the actual subcontractors … that will then get passed on to the actual builders, and that will get passed on to the consumer,” he added. “At the end of the day, it’s just flowing down the hill, and it always goes back to the consumer.”
That cascading pressure has developers on edge. And tariffs aren’t the only inflationary force. On top of high interest rates, labor shortages and insurance hikes, global shipping costs are climbing fast. The Baltic Dry Index, a benchmark for dry bulk shipping rates, has jumped nearly 270% since January, driven by fuel costs and tighter vessel supply, JLL reports.
“Most experienced developers have already built contingencies into their pro formas to account for volatility in material costs and interest rates,” Peachtree Group CEO Greg Friedman said.
“That said, when you get a sharp, unexpected spike, like tariffs on finished copper products, it forces teams to reexamine budgets in real time. Some projects get delayed, others get rescoped. The bigger concern is the compounding effect.”
Where Copper Can’t Be Cut
While copper may not dominate a project’s budget — KPG’s Kraut said it typically accounts for 3% to 5% of total hard construction costs for commercial buildings — it plays an outsized role in asset types like data centers, hospitals and restaurants, where performance standards leave little room for compromise.
“This is another example — certainly steel and aluminum tariffs are a very large example — of how construction is being affected more than most industries by tariffs and adding to the cost and complexity of construction projects,” said Ken Simonson, chief economist at the Associated General Contractors of America.
Material tariffs often spark immediate price spikes that later soften. When Trump imposed duties on steel and aluminum in 2018, prices shot up and then eased within a year as developers delayed or canceled projects, demand cooled and exemptions diluted the impact.
In today’s weakened construction market, the full impact of tariffs may take time to materialize. With many projects already on pause and competition for subcontractors low, price hikes are being absorbed or delayed.
“We may not really see the new equilibrium of material prices with an active market for some time,” said Daniel Pomfrett, Americas cost management lead for JLL. “But the costs will eventually reflect these tariffs.”
There will be some more immediate impacts. Developers are already rethinking bid timing, draw schedules and supplier relationships as uncertainty grows.
Meanwhile, Trump’s order could spark further disruption: Proposed tariffs on refined copper loom in 2027 and 2028, and a new rule would require 25% of U.S. copper scrap to stay domestic. Export controls are also under review.
For developers, the message is clear: Volatility is here to stay.
“Tariffs and persistent inflationary pressures will likely keep rates elevated, further constraining new development,” Friedman said. “Ironically, that could be a double-edged sword, curbing future supply while ultimately improving fundamentals for existing property owners due to reduced competition.”