Plumbing Construction Services
Sourcing Guide & Market Intelligence

Tariffs to negatively impact the building and construction machinery sector

• The United States implemented a blanket tariff of 10.0% on all US imports of foreign goods, as well as a cumulative 145.0% tariff on China and a 25.0% tariff on goods from Mexico and Canada not compliant with the U.S.-Mexico-Canada Agreement. Other large sources for imports of building and construction machinery, like Japan, South Korea, and Germany, may face higher tariffs; as of April 9, a 90-day pause on reciprocal tariffs is in place.
• The increase in the average tariff rate on building and construction machinery imported from tariff-impacted countries will add to the price of imports, which are typically passed on to buyers in the form of higher prices. According to The Budget Lab at Yale, the additional tariffs on imports will increase overall prices for machinery and equipment from 3.1% to 6.4%.
• According to a survey from Construction Equipment Magazine in April 2025, around half of the respondents reported that the higher tariffs would increase operating costs by up to 15.0%, and more than half said they plan to pass those increases along to buyers. The United States implemented a full 25.0% tariff on steel and raised the aluminum tariff to 25.0%, which will increase the cost of raw materials, leading to higher costs for manufactured building and construction machinery.
• As many building and construction machinery brands source parts and components such as steel, engines, and electronics from foreign countries, higher tariff rates will put upward pressure on prices and lead to higher rental rates as manufacturers and dealers pass on costs. In addition, suppliers that source parts from tariff-affected regions may see supply chain disruptions as they seek alternative suppliers to mitigate tariff impacts.
• Japan, one of the largest sources of building and construction machinery imports, will now face a flat 10.0% tariff, negatively impacting US buyers. As a result, major suppliers in these markets, such as Hitachi, Komatsu, Kubota, Sumitomo, Kawasaki, and Toyota, will face obstacles to competition in the US market.

Crude oil prices dip, but natural gas and fuel prices remain volatile in 2025

• Oil prices have been falling with the introduction of higher tariffs and the predicted decline in global demand. The OPEC+ group of countries also announced they would be unwinding production cuts and increasing their collective output target for May by 411,000 barrels per day.
• Trade wars, ongoing conflict between Hamas and Israel, and general unrest in the Middle East is causing uncertainty surrounding oil prices has been leading to volatility in prices. In the first week of April 2025, crude oil prices hit $62.22 per barrel, but volatility remains as geopolitical concerns remain.
• Natural gas prices rallied early in 2025 with colder-than-usual temperatures in the United States and high demand, topping out at $4.68/MMBtu in March. Prices have since fallen with the onset of trade wars and fears of a global recession to $3.90/MMBtu in the first week of April 2025.
• The national average of gasoline prices has been rising slightly due to refinery maintenance/outages and blending issues, hitting a national average of $3.26 per gallon in the first week of April 2025. However, gasoline futures have been declining due to fears of noversupply and deepening concerns about weakening demand with tariffs.

Construction activity slumps as interest rates remain high

• During the last three months, total construction spending inched downward by 0.4%, driven by a more sizable 1.0% decrease in private construction spending. However, public construction spending rose by 1.5% during this period.
• Despite recent federal funds rate cuts, interest rates for consumers and businesses have climbed in the last month as increased economic risk has counteracted the lower borrowing costs faced by banks.
• Elevated interest rates weaken construction demand because they increase construction project financing costs. Thus, high interest rates have continued to reduce private construction activity, which is the segment most exposed to interest rate shifts.
• As a result, demand for products and services related to construction is currently weak. However, increasing public sector construction spending is adding to demand in a few construction markets, such as utilities and infrastructure construction.