In today’s volatile economic climate, global trade policy isn’t just a topic for news headlines—it’s a real concern for construction companies and suppliers whose bottom lines depend on predictable costs and payments. And one economic wildcard that continues to create ripples across the construction industry? Tariffs.
Rising costs, delayed payments, and increased financial risk are becoming more common in projects that were once considered solid. But could tariffs really be to blame when suppliers stop paying their bills?
Material Costs on the Rise
The construction industry is feeling the pressure. Just this past March, the federal Bureau of Labor Statistics reported a 0.5% increase in overall construction input costs, with nonresidential input prices jumping 0.6%. These numbers, highlighted by the Associated Builders and Contractors, reflect a broader trend of rising costs and tightening margins—especially on projects that were bid before inflation and trade tariffs threw budgets into chaos.
In many cases, suppliers and subcontractors are caught in a financial squeeze. They may be locked into fixed-price agreements that no longer make financial sense in light of increased costs. When material prices surge after contracts have been signed, some suppliers may struggle to meet their own obligations—let alone pay their outstanding balances.
Troubling Tariffs & the Unseen Impact of Trade Wars
The average builder has no control over tariff policies or international trade disputes. But that doesn’t mean they’re immune from the fallout.
Tariffs on imported steel, lumber, copper, or electronics can quickly make previously affordable materials prohibitively expensive. For example, a construction firm that agreed to deliver a project under a pre-tariff budget may find itself scrambling to fund a job now bloated by unexpected cost increases. When project budgets are suddenly underwater, payment to vendors, suppliers, and subcontractors is often the first thing to get delayed or dropped.
Many builders and property owners are now stuck in a precarious position—squeezed between rising input costs and fixed contract prices. This is especially troublesome for projects that were submitted or started long before the recent wave of price increases took hold.
Navigating Delayed Payments: Flexibility or Firm Action?
The question facing many businesses is whether to allow more leeway—or start taking formal action when payments stop coming in.
Collecting unpaid balances in the construction industry is already a complex task. There are often multiple creditors vying for limited funds, and untangling who gets paid—and when—can be time-consuming. In this climate, clear, written credit agreements and enforceable payment terms are more important than ever.
When a supplier fails to pay or a property owner defaults, companies must weigh their options:
- Is there still a path to resolution through communication or renegotiation?
- Does the situation warrant escalation to collections, mediation, or even litigation?
- Is there a construction lien option available under state law that might protect your right to payment?
Sometimes, the writing is on the wall. If you know that your invoices won’t be paid and there’s no communication from the other party, it may be time to assert your legal rights sooner rather than later. Taking swift, informed action can improve your chances of recovering the money you’re owed—especially if other creditors are lining up.
Dispute Resolution: Mediation, Collections, or Litigation
Most businesses prefer to resolve disputes without resorting to court. Mediation may be a good first step, particularly when there’s a disagreement about the quality of materials or services delivered. If mediation fails—or if the debtor simply disappears—pursuing collections or legal action may be necessary.
Construction litigation can be complex, especially when tariffs and global pricing shifts muddy the waters. But with the right legal strategy, you can protect your business and enforce your contractual rights, even in uncertain times.
Final Thoughts: Protecting Your Business in an Unpredictable Market
In an era where global trade decisions can impact local construction jobs, it’s essential to stay ahead of the financial risks that tariffs and supply chain disruptions create. By keeping credit agreements up to date, closely monitoring project finances, and acting quickly when payments fall behind, construction professionals can protect their businesses and minimize long-term damage.
If you’re facing payment delays, supplier defaults, or other construction-related disputes, consulting with an experienced construction litigation attorney can help you evaluate your options and plan a strategic path forward.