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In an industry already challenged by tight margins, fluctuating material costs, and prolonged payment cycles, the recent tariff announcements have created a financial rollercoaster for subcontractors. As these changes continue to take effect, understanding their anticipated impact and implementing strategic responses is essential for business sustainability.

Understanding Tariffs

Tariffs are essentially taxes imposed on imported goods and materials. The designed to protect domestic industries, address existing trade imbalances, and leverage economic pressure on other countries. 

How it works: When a government imposes tariffs, importers pay these additional costs at the border, which typically result in higher prices for materials throughout the supply chain.

Current Tariff Landscape

The tariff situation in the US has been a rapidly evolving headline over the past few weeks—and it’s been a lot to keep up with. Here’s a so far, along with a breakdown of what subcontractors specifically need to know:

• “Reciprocal Tariffsâ€� Policy: On April 2, 2025, President Trump signed an executive order establishing a , which initially introduced a baseline tariff of 10% on all imports to the US. This tariff remains in effect for most countries.
• Additional Reciprocal Tariffs: Beyond the baseline, higher reciprocal tariffs were applied to specific trading partners. This included a 34% tariff on Chinese imports and a 20% tariff on imports from the European Union. Initially, these additional tariffs affected .
• Pause on Reciprocal Tariffs (Except China): On April 9, 2025, President Trump announced exceeding the baseline 10%, with one notable exception—China. Their tariff was increased to a total of 125% (including previous tariffs). This pause is currently expected to end on July 9, 2025.
• Section 232 Tariffs on Steel and Aluminum: The , which were implemented on March 12, 2025, remain in effect. These tariffs are exempt from the additional reciprocal tariffs based on the country of origin, with the exception of Russia, which remains subject to 200% tariffs on all aluminum materials, as per .
• Tariffs on Canada and Mexico: Existing tariffs on imports from Canada and Mexico, established on March 4, 2025, remain in effect. The majority of these imports are subject to a 25% tariff. However, goods covered under are currently exempt from any tariffs. Additionally, non-USMCA-compliant energy and potash (a key fertilizer ingredient) imports are subject to a 10% tariff.
• Investigations into Copper and Lumber: Currently, copper and lumber products are exempt from the new reciprocal tariffs. However, investigations into how tariffs on these imports could threaten economic stability are ongoing, with results expected by November 2025. As written in this , “[i]nterested parties are invited to submit written comments, data, analyses, or other information pertinent to the investigation to the .â€�

• Tariffs on Automobiles and Parts: Imported new cars falling under currently face a 25% tariff, effective April 3, 2025. A separate 25% tariff on certain imported car parts is scheduled to take effect on May 3, 2025; however, details on this aren’t currently clear. Additionally, any auto parts imported from Canada and Mexico that don’t meet USMCA rules will face a 25% tariff.

To further clarify which tariffs currently apply to specific products, refer to this .

As negotiations continue over the next three months, subcontractors should be prepared for the potential reinstatement of higher tariffs after the 90-day pause expires. 

Direct Impact of Tariffs on Commercial Subcontractors

The effects of these tariff changes are already rippling through the subcontracting ecosystem:

Material cost increases: Though the 90-day pause provides temporary relief for some materials, the 10% base tariff (along with the existing 25% tariffs on steel and aluminum) continues to drive up costs. This comes after in early 2025 due to panic buying. Subcontractors dealing with Chinese-sourced materials are experiencing the most severe impact, with potential cost increases exceeding 100% in some categories.

project that prices will likely keep rising as the year progresses, with even domestic suppliers potentially raising their rates to capitalize on reduced international competition and heightened demand.

Project abandonment surge: , with private sector projects being abandoned at nearly twice the rate of public projects. This spike in canceled work creates immediate revenue gaps for subcontractors, forcing them to frantically reallocate teams and resources from these projects while rebuilding their project pipelines.

Supply chain disruption: The back-and-forth tariff changes are reshuffling the entire construction supply chain. With Chinese materials now facing 125% tariffs, suppliers are scrambling to find new sources, creating unpredictable material availability and pricing. Subcontractors may experience longer lead times and less reliable delivery schedules, making it harder to plan projects effectively.

Contract challenges: Subcontractors in fixed-price contracts who signed before the tariff announcements could be forced to absorb costs that weren’t initially factored into the bids.

Cash flow pressure: Perhaps most critically, the combination of higher upfront material costs and potentially delayed payments could create significant cash flow problems for subcontractors. 

Strategic Planning During the 90-Day Pause on Tariffs

The temporary pause creates both opportunity and urgency for subcontractors. While the natural instinct is to cut costs and delay investments, there are other strategies that can help you build up your financial resilience before these tariffs are potentially reinstated.

1. Optimize cash flow management.

Revamp your billing process: Streamline progress billing by implementing systems that standardize documentation, track completion percentages accurately, and seamlessly generate custom pay applications for all your GCs. Together, this can dramatically increase your pay applications� first-time acceptance rate, helping you avoid last-minute fire drills and payment delays.

Enhance collections: Review or implement an effective A/R escalation process for handling overdue invoices. Set up follow-up protocols and clarify roles to help your team secure payments more quickly (or use Siteline to do it for you).

By speeding up your payment cycle, you can improve working capital, which helps offset rising material costs and provides a buffer against potential project cancellations.

2. Leverage cash flow forecasts.

Create detailed forecasts: Prepare weekly cash flow forecasts for the next 120 days, extending beyond the tariff pause to identify potential issues. For subcontractors, this involves aligning expected material payments with anticipated progress billings and retention releases across all active projects.

Plan for impact: Create multiple financial scenarios based on different post-pause tariff outcomes. Consider modeling the impact of potential 25%, 50%, or higher tariff rates on your specific material mix and project portfolio.

The clearer your financial picture, the more insight you’ll have to make critical decisions about staffing, material purchasing, and which new projects to pursue or avoid.

3. Adjust contract strategies.

Material price protection: For contracts extending beyond the 90-day pause, incorporate escalation clauses that allow for adjustments based on actual material cost increases.

Timing and terms: Where possible, negotiate more favorable payment and retention terms and consider requiring deposits for specialized materials likely to face higher tariffs after the pause expires, particularly those sourced from China.

4. Reassess supply chain and inventory.

Strategic sourcing: Identify materials most affected by China-specific tariffs and explore domestic or international alternatives with lower tariff exposure.

Selective stockpiling: For critical materials that may face higher tariffs after the pause expires, consider reasonable advance purchasing while tariff rates are lower.

How Siteline Can Help

With the clock ticking on the 90-day tariff pause, investing in your financial processes isn't just smart—it's urgent. Siteline's billing software was specifically designed to address the unique challenges subcontractors face in the payment application process.

Our platform centralizes and streamlines your entire billing workflow, eliminating the manual processes that typically delay payment. By generating compliant payment applications in minutes instead of hours, automating collections processes, and providing real-time visibility into your cash flow pipeline, Siteline helps subcontractors build financial resilience amid market fluctuations.

If you're interested in learning how Siteline can improve billing efficiency and speed up payments by three weeks, request a personalized demo here.