Tariffs and Immigration Enforcement: The Construction Sector's New Challenges

The construction sector, a cornerstone of the goods-producing industries supersector group, is facing unprecedented challenges due to tariffs and immigration enforcement actions. According to the Associated General Contractors of America, the sector has seen a decline in employment, with nonresidential construction stalling and residential construction shedding jobs. This trend is consistent with a survey that highlights how tariffs and labor shortages are leading to project cancellations and delays.

The latest figures show that nonresidential construction—not only homebuilding—has stalled. Ken Simonson, the association’s chief economist, noted that owners have hit the pause button on many projects due to uncertainty over the impact of tariffs and other policy upheavals. Despite the lack of employment growth, the unemployment rate for recent construction industry workers in August was only 3.2 percent, tying the record low for August set in 2024. This low industry rate likely results from workers leaving the industry to avoid being swept up in immigration enforcement actions.

The 2025 AGC of America-NCCER Workforce Survey found that 16 percent of construction firms reported owners had canceled, postponed, or scaled back projects resulting from changes in demand or need due to tariffs. Roughly one-fourth, 26 percent, of contractors experienced project setbacks resulting from changes in demand or need due to policy changes in areas such as federal funding, taxes, or regulations. In addition, 28 percent of firms reported immigration enforcement actions in the past six months had affected their projects.

These policy upheavals affecting costs, funding, and employment are delaying vitally needed infrastructure, job-creating manufacturing projects, and much-needed housing. Association officials urged officials in Washington to stabilize trade policy and to better target immigration enforcement in a way that does not disrupt construction. Jeffrey D. Shoaf, the association’s chief executive officer, emphasized that "The economy depends on construction. Constant changes in tariffs and other federal policies, and misdirected immigration enforcement are interfering with the industry and the broader economy."

The construction sector's recovery from the COVID-19 recession was swift, with employment rebounding to 94% of pre-pandemic levels by June 2020. However, the current labor shortages and immigration enforcement actions threaten to undermine this progress. The sector's reliance on a diverse workforce, including undocumented workers, means that any restrictions on labor supply could have a profound impact on project timelines and completion.

In summary, the construction sector faces significant challenges due to tariffs and immigration enforcement actions. These issues are leading to project cancellations and delays, which have long-term economic implications for the sector and the broader economy. Addressing these challenges will require a comprehensive approach that includes policy reforms, investment in workforce development, and the adoption of innovative technologies.