Architects are navigating tariff pressures in an uncertain market

Architects could easily fill hours with stories of significant change orders and last-minute design adjustments demanded by picky clients. But today's rapidly shifting tariff and trade policies, as well as the resulting uncertain economic environment, has made alterations even more fundamental to balancing project goals with responsible design. 

While the Trump administration’s tariff levies have swung wildly back and forth in recent months and promise to create continued uncertainty around buildings and budgets, the only certainty is change. Architects will likely face significant challenges in coming months as projects get altered, downsized, or redesigned to take rising material costs or shifting financial realities into account. AIA billing index figures already show new project activity has waned; March figures found decreases in overall business as well as declines in new project inquiries. 

The types of budget-related shifts hitting projects vary considerably. Institutional projects like schools, with long timelines and fixed budgets, have less price flexibility. Big box and warehouse projects require lots of steel and aluminum for framing. And apartment buildings remain very price sensitive. Axios Architects and Consulting in Chicago was pushed to downsize an eight-story apartment building by three stories due to rising costs, and Austin-based architecture firm Page found that a hotel project in nearby Round Rock, Texas, the Ruby Hotel, would be cheaper if the design was altered to utilize light gauge metal instead of wood, as it was originally intended.

“We are well-poised to pivot,” Megan McCoy, Page’s operations director in Austin, told the Austin Business Journal. “It may have nothing to do with tariffs. A contractor may get a better rate, maybe they have excess materials from another job. There’s a variety of scenarios right now, but we as an industry are acquainted and equipped to pivot.”

It’s a continuation of cost escalations that have steadily increased the cost of constriction. Stats from the Association of General Contractors shows that monthly increases in costs have become standard; construction costs are up 40% since 2020. 

“Architects and engineers are sitting on the sidelines a little bit right now,” says Phillip Ross, a building practice leader at Anchin, a consultancy. “The future owners of the buildings are the ones thinking, ‘What can I do?’ They may have gotten some funding approved, and now don’t want to spend 20% more on the building.”

Most projects that have broken ground have already sourced their materials and also have material escalation clauses in their contracts. Projects in preconstruction are most impacted by the changing material marketplace. Without locked-in labor and materials costs, preconstruction projects may be pushed to start trimming amenities, shrinking common areas, and vastly rethinking material choices. 

But once there’s more cost certainty and decisions get made to rework or proceed, architects will be tasked to look at the potential for redesign. Often, the moment before construction starts, when materials purchases and prices come into play, can trigger last-minute reconsiderations.

“How can we do things differently without compromising the project?” says Ross. 

How tariffs add up

One of the challenges of reacting to tariff uncertainty is that tariff pressure alone isn’t causing shifts in the way projects are built and designed, says Phil Bartkowski, DPR Construction’s national preconstruction leader. 

The cost impacts haven’t been nearly as extreme as tariff percentages make them out to be; several have been rolled  back, pushed back or paused, and often, material like steel can be sourced from numerous nations with differing tariff exposures, meaning the headline-grabbing figures only represent a percentage of a percentage of the total increase. 

As of mid-May, a widespread series of redesigns due solely to tariff pressures hadn’t materialized, adds Tim Jed, DPR Construction's supply chain leader. That’s partially due to shifting goalposts in terms of tariff levies, as well as the difficulty in shifting. Steel and aluminum tariffs have had the biggest impact on construction-related materials so far, he said, and if a project is already too far along, pivoting to another material can be costly and have overall timeline implications.

However, there has been a noticeable shift in how teams approach material and systems specifications. DPR and the design teams it's working with have observed more due diligence happening up front, with staff digging deeper into the implications of their choices and being less likely to rely on default or legacy specifications without scrutiny. A strategic approach that leverages a deep understanding of the tariffs and detailed actionable data can be more effective than redesign, without pushing schedules back. 

Bay Area architect Linsey Dunn advocates that architects use this moment use this moment to focus on more sustainable design strategies in pre-design, planning for fewer materials overall to reduce the potential cost increases that may come later. She recommends using advanced framing techniques to cut down on overall lumber usage, utilizing standardization in design materials, and reusing and salvaging on-site materials.

Ross recommends that, based on the choices made by designers and engineers, construction teams look to diversify their suppliers early in the process and even try to lock in prices, which may necessitate earlier collaboration across design and build teams.  Architects should back into budgets, factoring in cost increases and designing with variability and options in mind when it comes to finishes and material costs.

“Tariff concerns are prompting a more deliberate evaluation of specified materials and products, especially those that may carry higher cost volatility or sourcing challenges,” Bartkowski said. “As a result, there’s an increased emphasis on identifying viable alternatives earlier in the design process to preserve flexibility and manage risk. This shift isn’t necessarily leading to full-scale redesigns, but it is influencing a more thoughtful and responsive design strategy overall.”

Architects avoiding a tariff discount

Even with a larger shift towards material awareness and different design strategies, it’s likely many projects in the works will seek some kind of redesign due to the shifting financial landscape for development. Ross says the situation with projects in preconstruction typically plays out one of two ways. First, a developer who solicited some bids and designs and hasn’t signed a contract with an architect may decide the changing financials warrant another approach and put the project back out for new proposals. 

The other scenario tends to happen when an architect has already signed a contract, and the project’s financial picture changes, pushing developers to ask for additional savings. It’s important for architects to clearly establish mutually understood processes and procedures for redesigns in case they find themselves in this situation.

“Architects and engineers need to make sure that if they’re doing a lot of extra redesign work, they need to potentially get compensated,” Ross said. “This is extra work that could be saving the owners millions of dollars.”

This becomes all the more important as the slowdown in new projects continues. AIA chief economist Kermit Baker recently noted that, while many architecture firms still have an average of 6.5 months of backlog, the current economic limbo will likely cut into that that figure, with clients anxious about starting new projects. With fewer RFPs, and more projects potentially dragging on as clients wait for funding, holding on to existing work may become all the more important.

“A lot of clients say this period reminds them of [the coronavirus pandemic], because you simply didn’t know what was going to happen,” Ross said. “Obviously, we want tariffs to be lower instead of higher. But everyone just wants to know what’s going on. Once you have a little certainty, you know what you’re dealing with.”

Patrick Sisson is a freelance writer covering the design and construction industries. He is based in Los Angeles.