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As tariff policies shift in 2025, businesses across sectors are grappling with increased costs and supply chain disruptions. For small businesses, construction firms, and real estate developers, these changes demand proactive strategies to mitigate risks and seize opportunities. Below are actionable steps tailored to each sector, supported by real-world examples.

Small businesses are particularly vulnerable to tariff-induced cost increases but can adapt with the following strategies:

• Reassess Supply Chains: Stephanie Boms, co-founder of Nessel, a Connecticut-based company providing lactation space solutions, has adopted a collaborative approach. Her business is asking supply chain partners to share the burden of increased costs rather than passing it entirely to customers.
• Adjust Pricing Transparently: Marie Olberding, CFO of Select Arc Inc., a manufacturer of welding electrodes, highlights the challenge of balancing price hikes with customer retention. Her company is considering spreading tariff costs across its operations to remain competitive.
• Diversify Revenue Streams: Brittany Hizer, COO of Pluie Inc., a Texas-based diaper-changing table manufacturer, has had to cut marketing budgets and rethink growth plans due to tariffs on steel and aluminum imports.

By diversifying suppliers and leveraging technology for cost management, small businesses can better weather tariff-related disruptions

The construction sector is heavily impacted by tariffs on imported materials like steel and aluminum. Here’s how firms are adapting:

• Lock in Material Pricing: A New Jersey warehouse project avoided an 8–10% steel price hike by securing early pricing, saving millions in potential costs.
• Adopt Contingency Planning: Contractors are incorporating price escalation clauses into contracts to account for future cost increases. For example, government-funded projects are now including contingencies for unexpected tariff-related expenses.
• Diversify Suppliers: Some firms are exploring domestic sourcing options despite challenges in capacity and pricing. For instance, contractors working on infrastructure projects are stockpiling materials like structural steel ahead of potential tariff hikes.

By planning ahead and leveraging tools like construction management software, firms can optimize procurement and maintain profitability despite rising costs.

Tariffs are driving up construction costs for real estate developers, forcing many to adjust timelines and budgets:

• Reevaluate Project Budgets: A developer working on a $100 million warehouse near Washington, DC, mitigated a 15% steel price increase by locking in early contracts but still expects overall costs to rise by 10% due to higher prices on rebar and roofing materials.
• Delay Non-Critical Projects: In Manhattan, a $20 million office renovation was put on hold due to rising prices for imported components like ceiling tiles and lighting systems.
• Streamline Designs: Developers are scaling back square footage or adopting modular construction techniques to reduce material usage while maintaining quality.

Sergio A. Barajas, Executive Director of the National Hispanic Construction Alliance (NHCA), offers two issues to monitor in relation to present tariff discussions.

1. The threat of tariffs results in some builders stockpiling wood, in essence buying more than they currently need. That and other factors have already pushed lumber prices up by more than 12% since the beginning of the year.
2. While wood is a substantial component of overall construction costs related to the creation of single-family homes, other materials and supplies will likely be impacted by the newly announced tariffs. It appears that imported goods from Asia will all be impacted by today's announcement (Flooring Materials, Wall Panels, Roofing Materials, Insulation Materials, Steel, etc.). Individually these items make up a smaller percentage of overall construction costs versus lumber. However, in aggregate, they materially impact the total cost of building.

While tariffs present significant hurdles, they also create opportunities for innovation and strategic growth:

1. Strengthening Domestic Supply Chains: Increased demand for U.S.-made materials could lead to more stable supply chains over time.
2. Operational Efficiency Gains: Companies forced to optimize operations may emerge leaner and more competitive.
3. Market Leadership Potential: Businesses that adapt quickly can capture market share from competitors struggling with similar challenges.

Changing tariff policies require businesses to be proactive rather than reactive. Small businesses should focus on financial resilience and supplier diversification; construction firms must adopt advanced procurement strategies; and real estate developers need to carefully manage project budgets while staying informed about policy changes. By learning from examples across industries and implementing these strategies, businesses can not only survive but thrive amid shifting economic conditions.

Disclosure: Please note that the information provided in this article is for educational and informational purposes only and should not be construed as financial advice.

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