News Summary
The construction industry in Colorado is experiencing significant challenges due to rising tariffs and escalating costs of building materials. A recent report indicates tariffs on essential materials have surged to 21%, impacting development confidence and economic growth. Consequently, sectors ranging from construction to agriculture and healthcare are feeling the strain, leading to increased project costs and potential housing shortages. Governor Jared Polis has voiced concerns over these impacts, as the industry grapples with the uncertainty of future tariff policies and their consequences on housing and economic activity.
Colorado Construction Sector Faces Major Challenges from Rising Tariffs and Material Costs
Denver, Colorado — The state’s construction industry is experiencing significant pressure due to escalating tariffs and rising costs of key building materials, affecting both developer confidence and economic growth. Recent analyses reveal that tariffs on critical construction materials have surged dramatically over the past year, with repercussions extending to housing availability and regional economies.
Surge in Tariffs and Its Impact on Construction Costs
According to a Colorado Office of State Planning & Budget report released on September 4, 2025, tariffs on essential building materials have increased from an average of 3% in 2024 to 21% in 2025. This sevenfold rise marks one of the highest tariff levels seen in over a century, with the last comparable spike occurring in 1910. Such elevated tariffs have significantly driven up the costs associated with production and procurement in the construction sector.
Broader Economic Context and Sector Impact
The sectors most directly affected include construction, agriculture, durable and nondurable goods, energy, healthcare, and technology. These industries collectively account for over 90% of Colorado’s international trade, underlining the widespread economic implications of tariff increases.
Construction Industry Significance
In 2024, the Colorado construction industry contributed approximately $33 billion, representing about 6% of the state’s gross domestic product (GDP). The sector employs more than 190,000 workers across over 22,000 businesses. Regionally, in Colorado’s Western Slope, construction makes up 9% of regional GDP and provides roughly 10% of local employment.
Material Costs and Construction Delays
Major raw materials such as steel, aluminum, and copper have seen cost increases ranging from 20% to 40% compared to 2020 levels. These increases are compounded by supply chain disruptions and fuel the rise in overall project expenses. Currently, about 7% of residential construction materials are imported, resulting in project costs being 15-25% higher than five years ago.
Effects on Housing and Development
Construction costs constitute approximately 35-50% of a home’s total building expenses. With increasing material costs, there is growing concern that housing development will slow down, particularly in rural areas where affordable housing options are already scarce. Although housing permits were expected to rise by 3.9% in 2025, recent projections have been revised downward to a mere 0.5%. Forecasts indicate it will be difficult to surpass 2024 permit levels, thus restraining new housing supply in the coming months.
Housing Shortages and Economic Effects
The ongoing high costs have contributed to a diminishment of the state’s housing deficit, which decreased from a peak of 140,000 units in 2019 to 106,000 in 2023. Nonetheless, pervasive construction delays are expected to exacerbate this shortage, especially in rural regions where demand remains strong and new construction is vital.
Government and Legal Developments
In response to the economic strain, Governor Jared Polis has highlighted concerns that tariffs are increasing consumer expenses and harming economic growth. The tariffs’ future remains uncertain, as a recent U.S. federal appeals court decision affirmed that the executive branch may lack authority to enforce many tariffs. A ruling is anticipated by October 14, 2025, which could lead to significant changes in tariff policies and their impacts.
Regional Outlook
Counties most susceptible to these tariff impacts include Eagle, Garfield, Mesa counties, alongside the Denver Metro Area. These regions are expected to continue experiencing construction delays, higher project costs, and slowed economic activity unless the tariffs are modified or eliminated.
In summary, rising tariffs and the escalating costs of construction materials pose serious challenges to Colorado’s economy, especially affecting the construction industry’s growth prospects and housing market. As legal and political debates continue around tariff policies, the full scope of their impacts remains to be seen, with regional repercussions likely to persist into the near future.
Deeper Dive: News & Info About This Topic
HERE Resources
Virginia Faces Growing Electricity Demands Due to Data Center Expansion
Durham Sees WeWork Downsize After Bankruptcy
Nevada Job Market Declines Amid Employment Stabilization
Construction Industry Faces Growing Challenges
Raleigh-Cary Metro Area Sees Drop in Apartment Construction
Raleigh Business Owners Show Strong Optimism Amid Inflation
Raleigh Business Owners Show Record Optimism Amid Inflation
Construction Industry Faces Challenges Amid Declining Private Activity
Construction Industry Confronts Multiple Challenges in Today’s Market
Altadena Housing Market Confronts Tariff Challenges
Additional Resources
- Vail Daily
- Google Search: construction tariffs
- Colorado Biz
- Wikipedia: Tariff
- Denver Post
- Encyclopedia Britannica: economics
Author: STAFF HERE RALEIGH WRITER
RALEIGH STAFF WRITER The RALEIGH STAFF WRITER represents the experienced team at HERERaleigh.com, your go-to source for actionable local news and information in Raleigh, Wake County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as the North Carolina State Fair, Raleigh Arts Festival, and the Hopscotch Music Festival. Our coverage extends to key organizations like the Greater Raleigh Chamber of Commerce and Visit Raleigh, plus leading businesses in technology and education that power the local economy such as Red Hat and NC State University. As part of the broader HERE network, including HEREAsheville.com, HERECharlotte.com, HEREGreensboro.com, and HEREOBX.com, we provide comprehensive, credible insights into North Carolina's dynamic landscape.
