News Summary
The construction sector in Colorado is facing significant challenges due to unprecedented tariff increases and soaring material costs. A recent report indicates that tariffs have risen dramatically, leading to higher prices for essential materials. This situation jeopardizes construction activity, exacerbating the state’s housing shortage and affecting the economy. Governor Jared Polis has expressed concern over the implications of these rising costs on families and the overall market. A potential ruling on these tariffs may provide hope for relief in the near future.
Denver, Colorado – The construction sector in Colorado is grappling with severe challenges stemming from soaring tariffs and escalating material costs, impacting both developers’ sentiments and overall profit margins. A recent report by the Colorado Office of State Planning & Budget, released on September 4, 2025, highlights that these tariffs, which have spiked from an average of 3% in 2024 to a staggering 21% in 2025, are driving up expenses for businesses and consumers alike.
This unprecedented increase, which marks a sevenfold rise compared to previous years, is the highest the state has witnessed in over a century, with the last similar rise occurring in 1910. Various sectors are feeling the pinch, including construction, agriculture, durable and nondurable goods, energy, health care, and technology, all of which collectively account for more than 90% of Colorado’s international trade.
The Colorado construction industry alone contributed an impressive $33 billion, roughly 6%, to the state’s gross domestic product (GDP) in 2024, supporting over 190,000 jobs through more than 22,000 businesses statewide. In the Western Slope region, construction represents about 9% of the local GDP and 10% of employment.
Compounded by the tariffs, the cost of essential raw materials such as steel, aluminum, and copper has surged by 20-40% when compared to 2020 prices. Currently, approximately 7% of materials utilized in residential construction are imported, which has led to project costs skyrocketing to levels 15-25% higher than five years ago. With construction materials making up 35-50% of the total expenses in home construction, there are burgeoning concerns over a potential decline in construction activity, attributed to a combination of diminished demand and rising capital costs.
Housing construction permits initially forecasted to rise by 3.9% in 2025 have been drastically revised to just 0.5%, with projections suggesting that these figures will stabilize near 2024 levels moving forward. This stagnation is further compounding the challenges facing rural Colorado, where the already notable shortage of affordable housing is becoming increasingly problematic due to the decline in construction activity amidst heightened costs.
Although the state’s housing deficit has decreased from a peak of 140,000 in 2019 to 106,000 in 2023, the limited construction activity is beginning to stifle potential resolutions to this ongoing issue.
Governor Jared Polis has expressed that the increased tariffs are not only inflating costs for consumers but are also exerting detrimental effects on the state’s economy. He highlighted that these rising costs are forcing families to make challenging financial decisions that could have long-term repercussions.
In a related development, a recent ruling by a U.S. federal appeals court has indicated that the executive branch may lack the authority to impose many of the current tariffs, with a definitive ruling on their fate anticipated by October 14, 2025. If these tariffs are curtailed, there may be a slight reprieve for the construction sector.
Particularly vulnerable to these economic pressures are counties such as Eagle, Garfield, and Mesa, in addition to the Denver Metro Area. The implications of these tariffs and rising costs present a marked concern for the future of the construction industry in Colorado, which remains a critical driver of the state’s economy.
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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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