Trump Administration's Impact on U.S. Construction: Key Changes Ahead

New Developments Expected in U.S. Construction Industry Under Trump Administration

As the Trump administration assumes office, the construction industry is preparing for substantial changes. With a focus on infrastructure investment and regulatory reforms, industry stakeholders are closely watching for shifts that could significantly impact their operations. This article delves into the six major topics likely to influence the industry during this administration.

Infrastructure Developments on the Horizon

President Trump has prioritized significant investments in U.S. infrastructure, potentially leading to a wave of construction projects across the country. Industry leaders should be ready for opportunities from government-sponsored ventures and public-private partnerships aimed at renewing roads, bridges, and transport systems.

Nevertheless, the financial frameworks for these projects are yet to be clarified. Companies must pay attention to how the Trump administration manages the bipartisan $1.2 trillion Infrastructure Investment and Jobs Act (IIJA), as preferences may shift from those set by the Biden administration. With nearly $300 billion of IIJA funding yet to be allocated as of late 2024, changes in funding priorities could occur. Trump's previous stance against certain projects, such as the $16 billion Gateway Project, signals potential reallocation of resources.

Also, the Trump administration's past reduction in budgets for agencies like Amtrak hints at possible cuts affecting other infrastructure programs. Businesses should remain vigilant about legislative developments and adjust to the changing funding landscape.

Anticipated Regulatory Reforms

Significant regulatory changes may be on the horizon as the Trump administration considers easing oversight and approval processes. The recent Supreme Court ruling striking down the “Chevron Doctrine” could enable further deregulation, facilitating project approvals and reducing compliance costs.

While this shift might create a more business-friendly environment, it raises concerns about maintaining environmental and safety standards. Industry stakeholders must engage with policymakers to advocate for balanced regulations that uphold safety and sustainability while streamlining bureaucracy.

Impact of New Trade Policies

Trade policy revisions are expected to influence the construction industry profoundly. President Trump has emphasized the introduction of tariffs to boost domestic competitiveness and revenue. A 25% tariff on Canadian and Mexican goods, effective February 1, 2025, underscores the administration's approach.

New tariffs could affect material costs and availability, impacting project budgets and timelines. Construction companies should anticipate supply chain disruptions and consider diversifying sources to mitigate these effects. Understanding the nuances of these policies will be crucial in maintaining a competitive edge.

Immigration Policies and Labor Market Changes

The construction labor market may face challenges due to changes in immigration policies under the Trump administration. President Trump's commitment to stricter immigration controls could affect the availability of both skilled and unskilled labor.

The construction industry, with some segments relying heavily on undocumented workers, may experience labor shortages. Companies might need to raise wages and explore workforce development strategies, such as partnerships with educational institutions, to secure a steady supply of qualified workers amidst potential labor constraints.

Shifts in Renewable Energy and Sustainability Focus

The Trump administration's energy policies could reduce emphasis on renewable energy and sustainability. Repealing the Inflation Reduction Act may lead to decreased demand for clean energy investments but could incentivize domestic oil and natural gas production.

Despite potential policy changes, demand for sustainable construction practices is likely to persist. Industry leaders should continue prioritizing energy efficiency and sustainability to align with long-term trends and consumer preferences.

Future of the Opportunity Zone Program

The Opportunity Zone Program, a key driver of real estate investment, is set to conclude in 2026. With over $40 billion invested since 2019, mostly in multifamily and commercial projects, the program's future under the Trump administration is of interest.

Scott Turner, slated to lead the Department of Housing and Urban Development, may push for extending the program, encouraging investment in distressed communities. An extension could benefit developers looking to capitalize on these opportunities.