The cost curve hasn’t bent yet. Turner’s Building Cost Index rose 1.3% in the first quarter of 2026 over the prior quarter and now sits about 3% above the 2025 average, and the firms that forecast escalation expect 4% to 6% across the year, with steeper jumps in trades exposed to tariffs or tight labor.
The pressure is loudest in materials. Nonresidential construction input prices climbed at roughly a 12.6% annualized rate in the first two months of 2026, the fastest pace since the supply-chain crunch of early 2022. Metals are doing most of the work.
The tariff math
The duties are specific and steep. Items made mostly of steel, aluminum or copper carry a 50% tariff. Derivatives of those metals sit at 25%, industrial and electrical equipment that incorporates them faces 15%, and softwood lumber carries 10% with derivative products at 25%. Stack those onto a structural or electrical package and the escalation isn’t a rounding error, it’s a line item that can move a bid.
How owners are responding
Escalation clauses are back. After a few years of trying to lock prices, more owners are agreeing to share metal-price risk rather than pay the contingency a contractor would otherwise bury in the number. The trades feeling it least are the ones light on imported metal. Everyone else is hedging. See our coverage of accelerating input prices and new U.S. rebar capacity. Index data from Turner Construction.