News Summary
The construction industry in Colorado is grappling with a surge in tariffs and material costs that threaten profit margins and overall sentiment. A recent report reveals tariffs on key construction materials have escalated significantly, leading to increased expenses for businesses and consumers. The state’s housing construction permits are forecasted to stagnate, as the costs of building materials rise, contributing to a worrying trend of reduced construction activity amidst a pressing housing deficit.
Denver, Colorado – The construction sector in Colorado is facing significant challenges as rising tariffs and material costs begin to impact developers’ profit margins and overall sentiment. A report released by the Colorado Office of State Planning & Budget indicated that increased tariffs are contributing to rising expenses for businesses and consumers across the state. This analysis was published on September 4, 2025, following an executive order by Governor Jared Polis aimed at studying the economic effects of tariffs on Colorado.
Tariffs on crucial construction materials have surged from an average of 3% in 2024 to an alarming 21% in 2025. This represents a sevenfold increase and marks the highest levels of tariffs witnessed in over a century, with the last comparable period dating back to 1910. This change has far-reaching implications, affecting various sectors including construction, agriculture, technology, and healthcare, which collectively account for over 90% of Colorado’s international trade.
The construction industry alone contributed approximately $33 billion, or 6%, to Colorado’s gross domestic product (GDP) in 2024. It employs more than 190,000 individuals across over 22,000 businesses. Notably, in the Western Slope region, the construction sector represents 9% of the local GDP and 10% of available jobs. However, as raw material costs for construction materials—including steel, aluminum, and copper—have risen by 20-40% compared to 2020 levels, the future outlook for this vital industry remains uncertain.
Approximately 7% of the materials used in residential construction are imported, leading to project costs that have skyrocketed by 15-25% over the last five years. Given that construction materials represent 35-50% of a home’s total construction costs, industry experts are concerned about the limited construction activity stemming from reduced demand and increasing borrowing costs.
Housing construction permits for the year 2025 were initially expected to rise by 3.9%, but projections have since been downgraded to just 0.5%. The revised forecasts suggest that permits will stabilize around 2024’s levels. This stagnation comes amidst an ongoing lack of affordable housing in rural Colorado, which has been compounded by declining construction activities driven by escalating costs. Although the deficit in the state’s housing market has decreased from a peak of 140,000 in 2019 to 106,000 in 2023, the challenges persist.
Governor Polis has emphasized that increasing tariffs are translating to higher costs for consumers and adversely affecting the state’s economy. The consequences extend to families who are increasingly faced with difficult financial decisions as prices rise.
In light of these developments, a U.S. federal appeals court recently affirmed that the executive branch may lack the authority to enforce many of the tariffs currently in place. A decision regarding the future of these tariffs is anticipated by October 14, 2025. Important areas that are likely to feel the effects of the tariffs include Eagle, Garfield, and Mesa counties, alongside the Denver Metro Area.
The rising costs of construction materials and tariffs present a complex challenge for Colorado’s economy. How state officials and industry leaders respond to these issues may determine the future stability and growth of the construction sector in the coming years.
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Additional Resources
- Vail Daily
- Google Search: construction tariffs
- Colorado Biz
- Wikipedia: Tariff
- Denver Post
- Encyclopedia Britannica: economics
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