Steel & Aluminum Tariffs: What They Do to Your Rehab/Build Budget (and How to Finance Around Them)

Tariff headlines aren’t just politics—they hit your rehab and ground-up (GUC) budgets through metal-heavy line items: structural steel, rebar, joists, metal studs, window/door systems, HVAC coils, wiring, railings, even roofing and siding. Below is a simple playbook for investors and builders—and how we structure financing when tariffs bite.

What changed (2024–2025) in plain English

  • Tariffs on Chinese steel & aluminum went up to 25% in 2024 under Section 301 actions. The White House+1  

  • In 2025, Section 232 steel/aluminum tariffs were expanded: aluminum moved to 25%, many exemptions were removed, and coverage widened—raising the floor under domestic prices. Congress.gov

  • Price signals: U.S. hot-rolled coil (HRC) is ~$803/ton (Oct 13, 2025), ~+15% YoY. LME aluminum is ~$2,770/ton, ~+6–7% YoY. Direction: metals are volatile but elevated vs. last year. Trading Economics+1

  • Why it matters for projects: analysts expect tariffs to lift construction material costs and slow starts into late-2025/2026 unless budgets adjust. S&P Global

Where your budget feels it

Rehab (Fix & Flip / Small-Multi value-add)

  • Metal-intensive scopes (railing, windows/doors, HVAC coils, electrical) jump first.

  • Even if you buy domestic, tariffs often raise the overall pricing environment because imports set the marginal price. S&P Global

Ground-Up (GUC)

  • Structural steel packages, rebar, connectors, metal studs, and curtain-wall systems absorb the initial shock.

  • Add lead-time risk: non-tariff shocks (e.g., a major U.S. aluminum mill outage) can compound costs and delays. Reuters

Quick math you can steal

  • If your rehab budget is $300k and roughly 20% is metal-exposed line items, a 10–15% metal price bump adds $6k–$9k to total costs.

  • On a $1.2M GUC, if 30% of your hard costs are steel/aluminum-sensitive and metals run +10%, that’s ~$36k unplanned—before schedule slippage.

  • Foreign Trade Zones won’t “wash away” Section 232 duties at consumption entry—don’t bank on it to dodge costs. U.S. Customs and Border Protection

How to defend your appraisal & underwriting (what we like to see)

  1. Two vendor quotes for every metal-heavy line item + a written price-hold window.

  2. Material substitution tree (e.g., tube steel → engineered lumber where code allows; aluminum storefront → thermally-broken alternatives).

  3. Escalation clause + allowances tied to an index (steel HRC / aluminum) so changes aren’t surprises.

  4. Contingency: 7–10% on light rehab, 10–15% on heavy rehab/GUC; more if schedule risk is high.

  5. Draw schedule matched to lead times (deposit, fabrication, delivery, install) so you’re never cash-starved at a milestone.

  6. Sensitivity tab in your model (+10–15% metals; +4–8 weeks lead time) with a clear plan to absorb.

Market value still comes from NOI or comps, not your interest math—but clean budgets and realistic contingencies do help proceeds and approvals. (Use our DSCR/bridge calculators to see break-evens.)

Financing plays with LoanFunders.com

Fix & Flip (rehab)

  • Rates from 8.25%, $100k–$3M (up to $4.5M case-by-case).

  • We’ll right-size contingency and draws around metal packages; interest reserves available for thin carry.

GUC (ground-up)

  • Min FICO 660 (700+ recommended); up to 90% LTC for experienced builders.

  • Milestone-based reserves for steel/aluminum deposits and fabrication; we like vendor-backed budgets and dated quotes.

DSCR take-out (hold strategy)

  • If tariffs push OPEX and delay lease-up, we can model permanent buydown vs. standard rate and I/O options and show whether it actually changes proceeds.

Action checklist (copy/paste to your GC)

  • Update your materials schedule with current quotes and lead-time letters.

  • Add a metals escalation clause + allowances to your contract.

  • Lock big-ticket metal orders earlier (fabrication slots), even if delivery is later.

  • Build a Plan B SKU path for windows/doors/HVAC coils.

Sources to keep handy

  • 2024 U.S. action raising tariffs on Chinese steel/aluminum to 25% (Section 301). The White House+1

  • 2025 update expanding Section 232 steel/aluminum tariffs and tightening exemptions. Congress.gov

  • HRC steel and aluminum price levels (Oct 2025). Trading Economics+1

  • Construction outlook: tariffs likely to lift costs/slow starts absent budget fixes. S&P Global

  • Example of non-tariff shock amplifying aluminum tightness (Novelis fire). Reuters

Need help repricing a budget? Reply with your scope, quotes, and timeline—or upload at LoanFunders.com—and we’ll return LTC/DSCR math, a reserve plan, and options to keep your deal moving.