Construction sector faces tariff uncertainty and worker health crisis

Construction sector faces tariff uncertainty, worker health crisis and uneven recovery

Tariff-driven cost uncertainty and a growing mental-health and overdose crisis among workers are shaping project decisions, staffing and funding across the construction industry. Owners and developers are adjusting procurement, contracts and project schedules to manage rising risks while industry firms reorganize regionally to chase efficiency.

Top developments

Tariffs and supply chain volatility are the biggest immediate concern. Firms report uncertainty about whether tariffs will be imposed, how large they will be and how long they will last. That uncertainty affects material costs, margins and even whether some projects proceed. To cope, many clients are pushing to buy materials earlier, change sourcing plans, and seek contract clauses that allow contractors to recover future tariff costs from owners. Efforts to shift supply to local sources are common but often limited by simultaneous demand for the same U.S.-based supplies and the highly global nature of the materials market.

Legal and project risk management is moving earlier in the project timeline. Legal advisors working on behalf of owners and developers say early involvement helps set expectations, establish contractual levers and preserve owner options during fast-moving projects. Services in demand include delivery method selection, contract negotiations, construction administration and closeout support. Technology, including AI, is already used for modeling and document management, and its expanding role could speed processes and influence decision making, though human oversight remains essential.

Worker mental health and overdose crisis is a parallel emergency. More than 5,000 construction workers in the U.S. died by suicide in the referenced year, and thousands more died from overdoses, with synthetic opioids involved in most overdose fatalities. The suicide rate for male construction workers is substantially higher than for men in the general population. Chronic pain, sleep loss, long commutes and stress about future employment after project completion contribute to substance use and mental-health challenges. Some firms have launched opioid task forces and widespread Narcan training to reduce overdose deaths, and sector groups are expanding mental-health awareness and training efforts timed around national prevention campaigns.

City-level and workforce impacts

In the city, construction injuries and fatalities have trended down in recent years, with a reported nine-year low in injuries and a ten-year low in fatalities continuing into the current year. Still, construction accounted for a sizable share of workplace fatalities. City budgets include new funding for construction site safety training, day laborer centers, and support for low-wage immigrant workers. Legislative proposals under consideration would set minimum combined wage-and-benefit floors on city-subsidized housing projects and create public databases of workplace fatalities.

At the state level, nonresidential construction has lagged pre-pandemic levels, leaving fewer high-paying construction jobs in the city. Residential work has rebounded in part through remodeling and incentives for multifamily development and office conversions. Planned megaprojects, including major transportation and station rebuilds and a multi-year capital plan for transit repairs and new lines, are expected to provide a boost to nonresidential activity in coming years. Staffing shortages at permitting agencies and potential federal policy shifts on immigration and infrastructure funding remain risks to recovery.

Regional consolidation and company moves

A regional consolidation announced by a major civil-builder group created a new specialty firm focused on the New York metro region’s tunnels, bridges, roadways and water systems. The new firm combines several legacy contractors under a single regional banner to pursue transportation and water infrastructure work and aims to capture efficiencies in operations, client service and risk management. Leadership roles for the new entity draw from the combined organizations, while financial terms and staffing impacts were not fully disclosed.

Completed projects and local design trends

A 21-story mixed-income residential building in an upper-Manhattan neighborhood recently completed construction. The project includes more than 200 rental apartments and a large cultural space reserved for a local theater organization, made possible by a municipal development bonus that supports arts organizations alongside housing. The building features a brick façade, recessed windows, community amenities such as a communal kitchen and a curated library, and commercial space for lease on lower floors. Interior fit-out for the theater is planned to follow, with a later public opening slated.

What owners and developers are doing

• Increasing early procurement to lock in prices before tariffs take effect, while weighing the risk of market shifts.
• Requesting contractual protections to pass tariff and supply-cost increases through to owners or contractors, depending on the deal.
• Introducing mental-health and overdose prevention training, including the distribution and training on naloxone (Narcan) for workers.
• Using technology and AI for more efficient project management and faster dispute avoidance, while keeping human oversight central.
• Targeting regional project teams and spinoffs to better match local market needs and create operational synergies.

Bottom line

The construction sector is navigating a mix of financial, supply and human risks. Tariff uncertainty and global supply pressures are reshaping procurement and contract strategy. Meanwhile, an urgent worker mental-health and overdose problem is prompting training and support programs. Local recovery is uneven: housing and remodeling have improved, while nonresidential work remains below pre-pandemic levels. Planned infrastructure investments and regional consolidations may help, but the path forward will depend on policy choices, labor availability and how industry leaders balance technology, legal planning and worker support.