This feature is a part of “The Dotted Line” series, which takes an in-depth look at the complex legal landscape of the construction industry. To view the entire series, click here.
Just a week into his second administration, President Donald Trump has already brought a raft of changes to the legal and policy landscape for construction. He signed a deluge of executive orders in the initial days of his presidency that have massive implications for labor, materials prices, permitting and project funding.
That means builders will have a lot of issues to watch and plan for this year. To help cut through the noise, here are three areas of focus for the new administration — and how to prepare for them.
Tariffs and material prices
Perhaps the biggest issue on contractors’ minds for 2025 is potential tariffs and how they will impact prices for construction projects. While the president backed away from his previous pledges to implement tariffs on Day 1 of his second term, he set Feb. 1 as the new deadline for imposing a 10% tariff on China and 25% tariffs on Mexico and Canada.
Attorney Trent Cotney, a partner and construction team co-leader in the Tampa, Florida, office of Adams and Reese, said while many construction materials are already produced domestically, their underlying components often come from overseas.
“The raw materials that are used to make those materials are sourced elsewhere,” Cotney said. “I’m concerned the cost of materials will skyrocket again.”
Cotney said that similar to the actions contractors took to navigate supply chain snarls and material scarcity during the global pandemic, they should take pre-emptive action now to protect themselves, including in their contracts with owners.
“I'm reminding every contractor, make sure you have a price acceleration provision in your contract,” Cotney said. “If for some reason these tariffs unintentionally raise prices dramatically, you need to be protected so you can pass those costs on to your customer.”
Labor could be hit by deportation push
Also under a close watch are labor issues. Trump signed several executive orders to crack down on immigration this month while the Pentagon sent 1,500 troops to the U.S. border with Mexico, according to the Associated Press. An estimated 20% of construction workers lack permanent legal status in the U.S.
Carol Sigmond, a construction attorney at Greenspoon Marder in New York City, said contractors should take similar steps to mitigating cost increases from tariffs to protect themselves from the impacts of any immigration actions on their jobsites.
“Flat out, I think you need to confront it in the contract,” Sigmond said.
“If there’s a labor shortage created by activities of Immigration, that’s a basis for a delay claim and it doesn’t sit on your back,” Sigmond said, referring to the U.S. Immigration and Customs Enforcement agency. “This would be a risk that goes to the owner.”
Cotney said changes to immigration policy under Trump could hit at the core of construction’s workforce. “Immigration issues concern me, because our industry is built off the backs of immigrant labor,” Cotney said. “To deny that is to not understand the reality.”
Indeed, contractors may face more challenges around this issue than with tariffs. While putting in a price escalation clause around labor is a viable approach, owners could also push back.
“It’s hard to go to a customer and say, ‘Well, the labor I was going to use left, because they're illegal,’” Cotney said.
In those instances, contractors may need to expand their subcontractor pool to include more established firms, which in turn could cause labor rates to increase further, a factor that should be considered in the contract as well.
“You’re going to have to hire ‘real’ subcontractors,” Cotney said. “And with ‘real’ subcontractors, you’ve got heavier overhead. So it’s going to cause labor rates to go up.”
A focus on waste, fraud and abuse
Supported by his new Department of Government Efficiency, Trump has indicated he is hyper-focused on looking for fraud in federal programs. Civil builders should be prepared for increased scrutiny, according to accountant Frank Banda, a managing partner in the Government and Public Sector Advisory at New York City-based accountancy CohnReznick.
“I think there will be probably more oversight, integrity monitoring, accountability, because there's an increased focus on reduction of fraud, waste and abuse,” Banda said.
Indeed, in his first week in office, Trump issued a slew of executive orders that mandate an array of sweeping policy changes, such as his “Unleashing American Energy” order that directs federal agencies to immediately stop disbursing certain funds from the Infrastructure Investment and Jobs Act and the Inflation Reduction Act. The Trump administration cites efficiency and rooting out waste as among the drivers for these executive actions, Daniel Ramish, partner at Dallas-based law firm Haynes Boone, said in an email.
Many open questions remain about the orders, and some provisions will likely see legal challenges in the coming months. Still, it’s clear that the executive actions will affect the contractual and other legal rights of federal contractors, said Ramish.
“Affected parties will want to strike a balance between working with agencies to implement the new administration’s policies and upholding their rights under their contracts, grants and other assistance agreements,” according to Ramish.
Construction contractors can expect that the new administration will require them to implement these changes to the extent relevant to individual contracts, grants and other assistance agreements such as loans or loan guarantees, according to Ramish.
“In some cases, contracts or grants may be terminated if they are not aligned with the new administration’s priorities. In that scenario, recipients and contractors should consult with counsel about their legal rights,” Ramish said. “Construction contractors will also need to review and make changes to their compliance programs based on new presidential directives.”
Not everything is changing, though. In addition to focusing on the new administration’s policy priorities, contractors should remain vigilant about complying with areas of policy continuity, such as domestic preference and cybersecurity requirements, Ramish said
“Contractors and assistance recipients must ensure they are tracking and complying with their obligations,” Ramish said.
