Industrial / Commercial Global Construction Newsletter
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Q2 2025
Executive Summary:
President Trump has increased tariffs on Chinese imports to 145%, China has upped its’ reciprocal tariffs on US imports to 125%, greatly escalating the trade war between the world’s (2) largest economies.
President Donald Trump announced he is pausing his tariffs strategy for the majority of the US’s trading partners. Placing a much lower “Reciprocal Tariff Rate” of 10%, effective immediately for 90-day period. This lower rate does not apply to China.
80 + countries have contacted the Trump White House to negotiate better terms related to this problematic tariff issue.
The global construction market is projected to experience another robust year of advancement in 2025. The industry is set to embark on an amazing expansion in the next 15 years growing from $11.7 trillion today to a $20 trillion market, a 75% increase, assuming no major conflicts or geopolitical event arises.
India, China, USA, Brazil, Saudi Arabia, Indonesia, Vietnam & Canada will be the main countries that fuel this dramatic expansion.
It appears that the US will do much better than the (27) European Union countries. The new proposed reciprocal US trade tariffs will be problematic for many of the USA’s main trading partners.
Overall, global GDP growth is projected to increase by 2.6% to possibly 2.9% in 2025. Construction work has resumed on the southern border barrier / wall between the USA & Mexico after a 4-year pause.
President Trump has initiated close to 100 Executive Orders (EO’s) with some of them focused on trade tariffs. The question is – how will these tariffs impact construction costs?
President Trump’s objective is to protect domestic production & US companies & encourage demand for these products by mitigating current unfair trade practices. However, it will take possibly 6 to18 months for US construction materials producers to expand their current manufacturing capability / facilities to meet this new demand. Look for construction to increase by 3% to 5% in the next 6 months.
The best way for an EPC / General Contractor & Sub-Contractors to protect themselves in the coming year(s) is to include a “tariff” related increased cost clause in their future Contracts & Purchase Orders, that allows them to recover these increased costs from their client.
On April 2nd President Trump announced his “reciprocal tariffs.” This major economic change could solve this vexing decades long problem that may have a positive impact on the US economy & construction sector.
The introduction and increase of tariffs between 10% to 25% on steel and aluminum product imports are anticipated to increase construction costs and possibly instigate supply chain issues for the US and other country’s construction markets.
These new tariffs are resulting in foreign companies constructing new capex projects for auto facilities, steel plants & micro-chip facilities valued at more than $150 billion.
| Rank | Countries | 2025 GDP $ Trillions | Estimated 2025 GDP growth | % of GDP related to Construction | Comments |
|---|---|---|---|---|---|
| 1 |  USA |
29.5 | 2.9% | 9% - 11% | We could be on the verge of a trade war between the US & China, the world’s (2) largest economies. The AI expansion is here, just d how big will AI be? The data / call center construction sector is experiencing substantial growth fueled by AI, advance micro-chip production and technology companies. President Trump.is set to announce reciprocal tariffs in early April that could be an important first step toward fixing longstanding U.S. problems with trade and manufacturing. |
| 2 |  CHINA |
19.3 | 4.5% | 11% - 15% | A potential trade war with the US will seriously impact the Chines economy & construction sector. Latest indications are emerging that China’s economy & construction sector are experiencing a serious slowdown. The Chinese Government contributed to this problem by providing low-cost loans that sparked an oversupply of new homes & office facilities. Construction expenditures are expected to remain subdued for the next 12 months. Relations with its neighbors & USA are very strained. The halcyon days of 6% &7% GDP growth appear to be gone. |
| 3 |  INDIA |
5.6 | 5.5% | 12% - 16% | The Indian economy is one of the fastest growing out of the world’s major countries. Assisted by government initiatives / investment programs, major Fortune 500 consumer goods investments India’s construction industry is forecast to experience dynamic growth in the next 12 months. India has overtaken China in as the world’s most populated country in 2025, with a population of 1.45 billion. The military standoff between India and China in the northern Himalayan region is tenuous and threatening, with troops positioned in close proximity to each other, both countries are claiming sovereignty of the disputed border area. India and China are serious rivals, this border issue could turn out to be a “ticking timebomb” now and in the future. |
| 4 |  GERMANY |
4.7 | 0.4% | 9% - 11% | The German economy has struggled for the last 5+ years (perhaps the lengthiest decline since the East / West 1990’s one Germany reunification). The war in Ukraine, emigration issues & a general malaise has gripped Germany. Problems could be on the horizon as Germany’s newly elected Chancellor has from day one to criticizes President Trump’s policies. The US is considering relocating 25,000 troops and moving back to the US or moving them to Hungary. Germanys lawmakers have voted for a historic $500 billion budget to be spent on new military & infrastructure projects. |
| 5 |  JAPAN |
4.2 | 0.3% | 9% - 11% | Still slow going, similar to the last 7 years, Japan construction sector similar to the overall economy is basically underperforming. |
| 6 |  UK |
3.6 | 0.9% | 9% - 11% | The UK construction industry is contending with a major slowdown, with many capital projects delayed or worse cancelled. Some industry experts believe that 2025 construction expenditures will fall by 5% to 15% from 2024 levels. Immigration is a hot potato; Ukraine & dealing with President Trump are some of the challenges. |
| 7 |  FRANCE |
3.3 | 1.3% | 9% - 11% | Still slow going, similar to the last 7 + years Immigration is a big issue; Ukraine V Russia & dealing with President Trump are some of the issues to deal with in 2025. |
| 8 |  ITALY |
2.4 | 0.7% | 9% - 12% | New Prime Minister / leadership could stir the pot & improve the economy & construction sector. |
| 9 |  BRAZIL |
2.3 | 3.8% | 9% - 12% | Political issues, wary of USA. The country exports three times more to China than to the US, insulating it from potential tariff threats under a returning Donald Trump. |
| 10 |  CANADA |
2.3 | 1.5% | 9% - 11% | Canada is a significant exporter of construction products to the USA; future tariffs & trade disputes could stymie future construction / economic growth in 2025. dealing with President Trump is a major issue for the new Prime Minister. |
| 11 |  RUSSIA |
2.2 | 3.2% | 11% - 14% | US & Russia discuss Ukraine peace proposals / cease-fire in Saudi Arabia, these talks could see the start of the end of this 3+ year conflict will see a big improvement in the Russian economy. |
| 12 |  MEXIC0 |
2.1 | 1.7% | 10% - 13% | Mexico is a major supplier of construction material to the US. Possible US tariffs, drug cartels, border issues & dealing with President Trump are the 2025 challenges facing Mexican economy & construction sector. |
2nd Q 2025 Prices at a Glance:
- Forecast Cost of a barrel of Crude Oil: $65 – $75
- Forecast of Euro / US $ Exchange Rate 0.90 – 0.95
- Forecast of UK Pound / US $ Exchange Rate $1.25 – $1.35
- Forecast of Copper per pound $3.95 – $4.20
- Forecast of Gold per Ounce $2,900 – $3,100
- US Construction Material Inflation (Basket of 10 construction materials): 2.8% – 3.6% (Average 3.2%)
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