Industry leaders say lack of clarity on trade policy is forcing difficult choices on projects worth billions
At a panel event titled “Tariffs, Trade & Tension: How Global Policy Is Hitting CA Construction,” held at Hanson Bridgett LLP’s downtown Los Angeles offices, industry leaders organized by California Women in Design + Construction (CWDC) gathered to discuss how federal tariff threats are reshaping the state’s construction sector. As trade policy uncertainty looms over everything from steel to semiconductors, executives are describing the unprecedented challenges they are navigating, which are already changing how buildings are designed, bid, and built.
“We’re definitely seeing an increase in costs in regards to labor and material, and it’s kind of following the same trend with inflation,” said Cindy Quinteros, a project manager at Bernards Construction, speaking at the September event. “Everything’s getting more expensive, so it’s getting harder to stay within budgets and find the labor that’s required to deliver a project.”
The concerns extend far beyond the typical concerns of traditional trade contractors. At the design level, Kate Diamond, a design director with HDR who has worked in the industry for nearly 50 years, noted a troubling disconnect between client expectations and market realities.
The biggest concern is uncertainty.
“Clients do not have a realistic sense of what it costs to build in Southern California,” Diamond said. “Our clients are often off by 30 to 40 percent of what it’s really going to take to do the project. This number might have been good if you’d started construction two years ago, it’s not good for today.”
The Waiting Game
Perhaps most frustrating for industry professionals is the uncertainty itself. Genevieve West, an executive vice president with Howard Building Corporation, described how the tariff discussion has created a holding pattern across the sector.
“A lot of our clients have asked us the same question for the past several months, since the whole tariff conversation started,” West said. “When is it going to happen? Everyone’s just waiting. So a lot of our projects got put on hold, because folks were trying to figure out, do we move forward? What’s the impact? What do we do?”
While tariffs have dominated headlines, West noted that actual impacts have been harder to pin down. “It’s been mostly inflation,” she said. “The tariffs have impacted a few different trades, but the material costs are so nominal when it comes to the overall scale of the projects that we do. It’s mostly been labor-driven, labor costs going up.”
Christina Gedeon, a senior project manager for Southland Industries in the San Francisco Bay Area, offered a view from the mechanical contractor level. “The biggest concern is uncertainty,” she said. “We’ll have vendors reach out, [saying], we’re seeing copper going up 25 percent, valves going up 30 percent, press fittings another 25 percent. And then the vendors will say things like, ‘Oh, well, we’re gonna try not to pass on the costs to you, because you’re a valuable customer.’ And then a couple of weeks later, ‘Oh, we have to pass on some of the costs.’”
Contract Structures Under Pressure
The panel, moderated by construction attorney Lisa Dal Gallo of Hanson Bridgett LLP, revealed how project delivery methods are being stress-tested by market volatility. While traditional design-bid-build remains in the industry, participants debated the merits of alternative methods which are gaining traction, including Integrated Project Delivery (IPD), Construction Manager at Risk (CMAR), and Traditional and Progressive Design-Build.
“Regardless of the delivery method, the team really matters,” Dal Gallo observed. “You can have a traditional delivery that can go well with a really good team that just works well together, and then you can have one that you have the right contract and the right delivery method, but the wrong team, and it goes very poorly.”
Diamond expressed frustration with CMAR, noting that “if the poor GC can’t bring in their trades and can’t have a rational, collaborative discussion, we get hit with the same number of submittals, we get hit with the same number of RFIs.”
For trade contractors, the delivery method has profound implications. “On these IPD projects, there’s a lot of communication,” Gedeon said. “We can talk ahead of time, hey, we’re seeing tariffs, we’re seeing price escalation, we can work together on how to maybe put together an allowance for that. But if it’s a short-term lump sum project, there’s no conversation. We just get told, your price is your price, that’s it.”
The Proof Problem
A recurring theme was the challenge of documenting cost increases in a way that satisfies all parties. Dal Gallo, drawing on her experience drafting contracts, emphasized the need for transparency.
Dal Gallo pointed out that, whether you are self-performing or subcontracting work, there needs to be transparency in how material pricing was put together. If you have this transparency within the contract, then it is easier to prove up material cost increases should they occur.
Labor, however, presents different challenges. “Labor is labor. You have zero control over that,” Dal Gallo said. “You get your labor rates in the trade agreement, or you have your own labor rates, those are transparent, everyone knows what they are, they’re in there, and now [they have changed.]”
Gedeon acknowledged the difficulty from the contractor’s perspective: “It’s harder than it sounds to get proof for all that. We try to track labor, but there’s only so much we can do. How long they spent cleaning tools each day — it’s just an estimate. We can’t track everybody every minute of every day.”
Strategic Responses
Despite the challenges, construction teams are developing strategies to manage risk. For longer-term healthcare projects, Gedeon described success in procuring primary materials in a timely manner.
“We have some healthcare projects where we went directly to the manufacturer and said, can you work with us on pricing copper?” she said. “They said yes, if you’re gonna buy 200,000 pounds or more. We worked with them to lock in pricing ahead of time.”
Equipment selection is also changing. After encountering a 30 percent price increase on air source heat pumps manufactured in China, Gedeon said her team is rethinking sourcing decisions. “We won’t pick those again on the next job,” she said. “Now we’re starting to look at where equipment is built more than before.”
West emphasized the value of early contractor involvement, even before formal engagement. “It might seem too early to get a GC involved, but I’m telling you, it’s never too early, especially if there’s lead time or cost impacts that could be floating around out there,” she said. “If we can hear it when it’s being discussed, we can have the opportunity to raise a hand.”
The Trust Factor
Underlying the technical and contractual discussions was a fundamental question about relationships. “I think it all starts with trust,” Gedeon said. “If you don’t trust that everyone is part of the team and has the same goal and the best interest of the project in mind, then you’re already starting off on the wrong foot.”
Dal Gallo reinforced this point from the owner’s perspective: “There is no project where somebody is losing their shirt that will come out well at the other end. If people start going belly up, it’s a disaster.”
Diamond, reflecting on decades of experience, put it more bluntly: “Clients need to understand the contractor needs to be paid fairly for the real scope, the architect and design team need to be paid fairly. We hope that the client realizes that there is no project where somebody is losing their shirt that will come out well.”
No Crystal Ball
As the conversation wound down, participants acknowledged they’re operating without a crystal ball. Actual tariff impacts remain limited so far, with most cost pressures coming from standard inflation and labor rate increases. But the expectation is that significant changes are coming.
“I actually think that tariffs are going to trigger increased escalation of the cost of things made in America, just as much as they will impact anything coming from China,” Diamond predicted.
For now, the industry is adapting as best it can — writing more careful contract language, building bigger contingencies into budgets, and maintaining closer communication between all project stakeholders. The fundamental challenge remains: how to plan multi-year, multi-million-dollar projects when the economic ground keeps shifting.
“Nobody has a crystal ball into the future,” Diamond acknowledged, “Other than telling your client, this is scary times, it’s likely to change several times, what contingencies are you holding to protect yourself? I don’t know how to design to protect them.”
As California’s construction industry moves forward, one message emerged clearly from the panel: early communication, transparent pricing, and mutual trust aren’t just nice-to-haves — they’re becoming essential survival strategies in an increasingly uncertain market.
