The producer price index for materials and services used in nonresidential construction rose 0.5 percent in July 2025 and 2.6 percent from July 2024, the largest 12-month increase since February 2023, according to an analysis of government data by the Associated General Contractors of America (AGC).

“Steep tariff increases earlier this year on aluminum and steel, along with a more recent tariff on raw copper, drove the producer price index for construction inputs higher for the third-straight month,” said Ken Simonson, AGC’s Chief Economist. “Even though contractors do not generally import materials directly, it is clear that domestic producers are raising prices in line with the protection tariffs are providing them.”

Simonson noted that tariffs on steel and aluminum were hiked to 50 percent on July 4, 2025, from the 25 percent rate that took effect on March 12, 2025, while a 50 percent tariff on raw copper took effect on August 1, 2025. In addition, tariffs on most imports from almost all the nations that supply vital construction materials took effect in early August, making further increases in construction costs likely over the next few months.

Three major construction inputs contributed to the acceleration in year-over-year costs:

• The producer price index for aluminum mill shapes jumped 7.4 percent last month and 13.7 percent from July 2024.
• The index for steel mill products slipped 0.5 percent in July but still climbed by 8.8 percent over 12 months.
• The index for copper and brass mill shapes rose 5.7 percent for the month and 6.9 percent year-over-year.

AGC officials said contractors were being squeezed by rising materials prices at a time when demand for some private-sector projects has slackened amid higher interest rates and market uncertainty. They noted that finalizing trade deals and lowering tariffs rates would help ease some of the market uncertainty and rising materials prices that are having an impact on the construction sector.