February 27, 2026

What the Supreme Court’s Tariff Decision Means for Construction Costs

Christian Dewhurst, Jackson Moore Gray Reed + Follow Contact LinkedIn Facebook X Send Embed

This article serves as a breakdown on the potential effects of the Supreme Court’s recent decision to strike down President Trump’s blanket tariffs as well as to provide an update to our previous blog post on the topic of materials pricing in the current landscape.

The health of the American construction industry continues to be shaped by the cost and availability of construction materials. Data from the final months of 2025 shows a steady year‑over‑year increase in material pricing for construction projects regardless of sector. These rising costs appear to be due in part to the tariffs imposed on foreign imports. Although the Supreme Court recently struck down most of those tariffs, the Trump administration swiftly responded by implementing a new round of 15% tariffs, leaving construction industry stakeholders with continuing uncertainty regarding the future pricing of imported materials.

Many industry participants who briefly hoped that the Supreme Court’s ruling would help reduce project costs may need to temper their expectations. With the administration already testing the bounds the Court’s decision, concerns about continued price increases and the possibility of additional payment disputes in the industry have only been made stronger. This article will advise industry participants about certain legal tools, such as contract drafting and lien rights, which can best position them to navigate these payment disputes.

Construction Industry Pricing Trends and Outlook

According to the most recent data from the Bureau of Labor Statistics, prices for non‑residential construction materials have increased by 3.2 percent over the past twelve months. Some categories have experienced significantly higher spikes. Steel mill products, for example, have risen by 17.0 percent. Construction machinery and equipment have increased by 5.6 percent, and concrete products have risen by 2.0 percent over the same period. The chart below provides a more detailed breakdown of the impact on various commodities:

While the full impact of the recent Supreme Court decision on materials pricing is not yet known, it is likely the case that the new round of tariffs will resemble the tariffs imposed on China during the first Trump administration. New tariffs implemented under the Trade Act of 1974 have certain important limitations: (1) they are capped at 15%; and (2) may only be imposed for 150 days unless extended by Congress. For a more detailed discussion on those tariffs, please read our colleague Patrick Kelly’s blog on the topic.

Broader Construction Industry Implications

Higher materials costs influence profitability across virtually every type of project. Contractors working under fixed price agreements are especially vulnerable because any increase in material costs between the time a bid is submitted and the time materials are procured can significantly chisel away at already tight margins. From the owner’s perspective, rising prices could force difficult decisions about whether to delay a project, reduce its scope, or purchase substitute materials. Many owners may choose to pause large projects until the material pricing market improves or at least provides greater predictability.

Inflation also plays a role in the decision making of industry members. Although the Federal Reserve has cut interest rates in an effort to stimulate spending and counteract inflation, inflation continues to steadily rise at the national level. Even with the benefit of lower borrowing costs, contractors, developers, and public entities must still account for elevated material costs and the unpredictability associated with tariffs. In many cases, the relief offered by lower interest rates may be partially or fully offset by the cost increases caused by reduced supply and muted competition. To summarize, although financing may become more accessible, procurement will likely remain expensive and difficult to forecast. For a more detailed breakdown on how inflation and interest rates affect the construction industry, particularly in Texas, check out our previous blog post on the topic.

The Role of Contracts in Reducing Exposure to Material Pricing Uncertainty

The complexities of the current market continue to demonstrate that careful contract drafting at the outset of a project is one of the most effective ways to mitigate risk. This point is worth reiterating from our prior articles because the challenges associated with tariffs, inflation, supply chain disruptions, and fluctuating interest rates are now a routine part of project planning.

For example, a supplier uneasy about the potential for tariffs to drive up material costs might negotiate a price-escalation clause. A price-escalation clause ties the contractor’s pricing to an external benchmark (such as an index or published average price) so the contractor is not forced to absorb dramatic and unanticipated cost increases that occur after the bid is submitted but before materials are procured. These clauses also serve to transparently inform the project owner or general contractor how material pricing variables may impact project costs so each party can budget and plan accordingly and not be caught off guard in the event of unexpected market shifts.

Owners, contractors, and suppliers should also consider incorporating a materials availability clause. These, like price escalation clauses, can function similar to a narrowly tailored force majeure provision. This clause establishes agreed-upon procedures and remedies if an uncontrollable event, such as a tariff surge or global supply chain disruption, makes procurement of essential materials commercially impracticable or impossible. By addressing these risks in advance, the parties reduce the likelihood of disputes and create a path for dealing with these ever-increasing circumstances.

As a final example, an “excusable delay” provision is another safeguard for material suppliers and contractors. These clauses normally protect a contractor from liability by shielding them from delay damages when performance is hindered by unforeseen events, such as global material shortages, tariff-driven supply disruptions, or other circumstances beyond their control. Typically, such provisions grant the contractor additional time to complete their work without penalty. Parties should expressly define what they agree amounts to an excusable delay. This upfront step can help each party avoid costly legal disputes over whether delay damages are excused or unexcused. As the industry will recall, these types of shortages on electrical components, steel, lumber, and other essential materials were especially prevalent during COVID, as were delays caused by labor shortages and COVID protocol inefficiencies. Excused delay provisions were particularly helpful, in some circumstances, to shield affected contractors, subcontractors, suppliers from liability.

Ultimately, there is no silver bullet contract clause to guard against uncertainty. Every project presents its own unique challenges, and suppliers, contractors, and project owners alike should take advantage of contract clauses to mitigate the risks associated with unpredictable material costs. Even small adjustments to the contract can make a huge difference between a manageable challenge and a costly legal dispute.

Protecting Payment Through Lien Rights

As this article has illustrated, when material prices climb and project costs escalate, suppliers and contractors face increased risk of nonpayment for their goods and services. In addition to the contractual and related traditional legal remedies, Texas law offers protections through its mechanics and materialmen’s lien statutes.

Anyone who has spent time in the construction industry knows the frustration of watching AR balloon on a project where payment feels like a lost cause. Thankfully, Texas lien law provides a safety net.

A mechanic’s lien allows contractors and material suppliers to assert a legal claim against the property where work was performed, or materials were delivered. This remedy significantly improves the likelihood of receiving payment.

To have a valid mechanic’s lien in Texas, a supplier or contractor must jump through certain procedural hoops. First, a pre-lien notice must be sent to the property owner and general contractor, informing them of the unpaid debt. Next, a lien affidavit must be filed in the real property records of the county where the work was performed. Finally, notice of the recorded lien must be sent to the relevant parties. Each of these steps is subject to strict deadlines based on when the work was completed or materials were delivered. Failure to meet these deadlines can result in an unperfected lien, significantly weakening the supplier’s or contractor’s ability to enforce payment.

Because lien laws vary by jurisdiction, it’s essential for suppliers and contractors (especially those operating across state lines) to understand the specific lien perfection requirements where they do business. While Texas’s lien statutes can be complex, those who take the time to comply with them are far better positioned to recover what they’re owed from delinquent owners, developers, or contractors.

Conclusion

Tariffs, inflation, and rising material costs present real challenges, but contractors, suppliers, and developers are not without tools to manage risk. By carefully drafting contracts and leveraging lien rights, industry participants can protect their interests and continue building with confidence in this evolving market.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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