Your bids need an escalation clause

If you do one thing after reading this newsletter, add an escalation clause to every bid you submit for the next six months.

The tariff situation just entered a new phase. The 10% global tariff expires July 24, and contractors bidding on work that extends into late 2026 or 2027 may be pricing materials under one tariff regime that gets replaced mid-project. Your contract language is the only protection you have.

Also worth your time this month: a labor shortage now officially being driven by ICE enforcement, and an energy efficiency tax deduction that just closed its doors for good.

Let's get into it.

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Two separate tariffs are hitting construction materials right now. The first, a 50% tax on imported steel, aluminum and copper, is permanent. The second, a 10% tax on most other imported goods, expires July 24.

When that deadline hits, the temporary tariff goes away, but no replacement rates have been finalized. The government is still working it out.

That creates a real problem for anyone pricing work that runs into late 2026 or 2027. You could be estimating materials under one set of rules that changes mid-project. A June survey by Dodge Construction Network found 91% of contractors are already seeing higher costs from tariffs. Some are walking away from jobs entirely: project abandonment jumped 88% year over year in 2025 as updated material quotes came in higher than owners expected. The AGC has a free tariff memo for contractors on its website that covers escalation clause guidance

Why it matters: The protection is in your contract language, not in waiting on Washington. If your agreement doesn't include a clause allowing you to adjust pricing when material costs spike, you absorb that difference out of your margin. The AGC has a free price escalation template on its website. Get it into every bid you submit before July 24. (AGC Tariff Resource Center)

Last summer, a superintendent in Mobile, Ala., lost half his crew after an ICE raid on a construction site in Florida, nearly 230 miles away. Workers stopped showing up out of fear. The $20 million project was delayed three weeks, racking up $84,000 in penalties at $4,000 a day.

That story has become an industry pattern. A joint survey by the AGC and the National Center for Construction Education and Research found that immigration enforcement has directly or indirectly affected nearly one in three construction firms. Immigrants make up 35% of the construction workforce nationally, and in trades like drywall, roofing and plastering, that share is roughly 57%.

Why it matters: The industry needs to add 349,000 workers in 2026 just to keep up with demand. There is no policy fix on the horizon. If your project schedule depends on labor-intensive trades, build in extra time now, particularly in Florida, Texas, and California where enforcement activity has been heaviest. (Fortune)

For two decades, contractors and building owners could claim a federal tax deduction worth up to $5.81 per square foot on energy-efficient commercial construction. HVAC upgrades, better insulation, efficient lighting systems—it all counted. On a 20,000-square-foot building, that's over $116,000 back at tax time.

That deduction expired June 30. Any project that had not broken ground by that date no longer qualifies, and there is no indication it is coming back.

Why it matters: Owners who were on the fence about energy-efficient upgrades just lost their best financial argument for doing it. If you have clients reconsidering scope on a commercial, healthcare or school project, this is likely part of the conversation. Build it into your estimates and your client discussions now. (DOE)

» The construction industry's national backlog hit 8.8 months in Q2, but the divide is sharp. Large contractors working on data centers are sitting on 12-month backlogs. Smaller firms average 8.3 months. The data center boom is real—it's just not evenly distributed. (RLB Q2 2026 Cost Report)

» Housing starts just hit their lowest level since 2020. Starts fell 15.4% in May, dragged down by a 40% crash in multifamily construction. High mortgage rates and rising costs are keeping builders on the sidelines. (NAHB)

» The 21st Century ROAD to Housing Act passed both chambers and is headed to the president's desk. It seeks to remove barriers to building homes, lower housing costs and shift greater control over housing to the local level. If signed, it would be the biggest federal housing supply bill in decades. (TIME)

» While residential construction sputters, industrial and logistics construction is having a moment. Indianapolis alone is seeing a resurgence of warehouse deals as companies lock in space and build-to-suit projects restart after hesitation. (Building Indiana)

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