Two kilometres west of the U.S. Capitol Building, on a site surrounded by a tangle of highways, all that remains of a 50,000-seat football stadium are a few old signs and a dusty field full of gravel.
A couple of excavators are clustered at the edge, now stationary after a year and a half spent removing the countless tons of concrete, steel and asphalt that formed the condemned carcass of the Robert F. Kennedy Memorial Stadium, first opened in 1961 as District of Columbia Stadium.
The site is now awaiting its phoenix moment: a new, US$3.7-billion stadium due for completion in 2030, with the surrounding parking lots later to be transformed into 5,500 housing units, commercial spaces and a new road system.
But to give the NFL’s Washington Commanders a new home, the stadium’s developers will need to navigate a difficult construction environment that has slowed building across the United States, one marked by rising material costs linked to tariffs, as well as fluctuating oil prices and a tight labour market.
“Tariffs are just another ingredient in a potent cocktail that has led to a significant downturn in construction activity over the last year,” said Richard Branch, chief economist for the American Institute of Architects.
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In July, U.S. spending on construction approached three-year lows, data from the U.S. Census Bureau show. Meanwhile, input prices across a range of common building materials were up more than 7 per cent year over year, according to an index from trade group Associated Builders and Contractors.
On Aug. 21, U.S. President Donald Trump enacted a range of new tariffs on Canadian goods, including a slew of construction goods, from plywood and concrete to doorframes and seating. These 50-per-cent levies build on existing ones on lumber and steel, with more set to come into effect on Jan. 1.
The impact of U.S.-imposed tariffs on Canada will vary across the American construction industry, based on the product.
A quarter of the softwood lumber deployed in the U.S. annually comes from Canada, according to the National Association of Home Builders, which said in a statement that it is urging the President to exempt building materials from his tariff regime.
And 5 per cent of the cement used in the U.S. originates in Canada, though that percentage is much higher in border states, the American Cement Association said.
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Tariffs on imported goods have contributed to a dilemma now being faced by construction professionals such as Michael Joseph, a project engineer from Chapel Hill, N.C., who works for a utility company. He facilitates planning between engineers and aligns budgets.
If his company marks up the price of a bid to accommodate the added costs of materials, he said while out for a stroll by the former stadium site, “that allows for some other company to say that they’ll come out lower, and then we lose out on projects.”
But if the company decides not to mark up the bid, he said, its margins will thin. And the cost pressures are not insignificant: Materials suppliers have started adding a “tariff response adjustment” of 30 per cent to help cover the cost of importing goods from Canada.
These markups have been applied to a range of products, from the pipes and plastic tubing they put in the ground to the wires running through them and the hammers used in construction, Mr. Joseph said.
In response to tariffs, some businesses are taking steps to protect their margins.
“Just recently, we added a clause to our contracts about escalation of material costs,” said Justin Holtzman, president and owner of Artisanal Builders Company, a general contractor specializing in remodelling and additions, which works in Virginia and Washington.
Normally, he said, the company can absorb price fluctuations of a few percentage points for the materials it buys. But for larger renovations, if the company is, say, purchasing cabinetry sourced from Canada, the most recent tariffs mean potentially cutting into already-thin margins.
He said his company sources materials from large suppliers and then passes them along at cost. The new clause, he said, will build in protections to contracts should the base cost of materials increase beyond what the company can absorb.
Given the trade war with Canada, he said, “if the materials go up a considerable amount, we have to protect against that risk.”
Normally, when margins are very tight, companies might reduce their headcounts or business operations, the AIA’s Mr. Branch said. But companies are in a quandary right now, as there are extreme labour shortages that have been aggravated by stricter immigration enforcement, he said.
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The industry is short 349,000 net new workers to meet demand for construction services this year, Associated Builders and Contractors said in January.
Contractors are “very much afraid to let go of labour for fear that when construction starts to recover, they won’t be able to find the workers they need to grow again,” Mr. Branch said.
One type of project has not slowed down: data centres. Spending on the construction of the controversial structures in July was up 60 per cent year over year, according to Census Bureau data.
But for projects such as the stadium, Mr. Branch said, the added costs and uncertainty could lead to scaled-back plans, delays or even cancellation.
“And then what is a hole in the ground stays a hole in the ground.”