Flathead Construction Demand Remains Strong Despite Tariff Uncertainty
Builders in northwest Montana are preparing for rising material costs and sourcing adjustments as the rollout of tariffs continues an on-again, off-again path
By Maggie Dresser
As the Trump administration’s rollout of tariffs on Canadian, Mexican and Chinese goods continues on a volatile trajectory, builders in the Flathead Valley are preparing for rising prices and many are adjusting their supply chains as the busy construction season begins.
A sweeping 25% tariff was initially set to take effect on Feb. 4 but was then delayed until March, followed by another suspension until April 2. The unclear messaging has created uncertainty among the contractors.
“Tariffs are on-again and off-again and on-again and off-again,” Glacier Precast Concrete owner Erik Powell said. “We are kind of getting whiplashed.”
As of March 26, steel and aluminum are the only building products currently facing 25% tariffs, which has shifted the way some business owners are buying their products.
While Powell was already in the process of transitioning to American steel product purchasing prior to the levies, he still sources cement from British Columbia, which could see a price increase if widespread tariffs go into effect next week as planned.
Glacier Precast sources most of the company’s materials domestically for projects that include concrete septic tanks, utility projects and retaining walls, but between 10% and 20% of his products are sourced from Canada.
“Prices could very well go up, or we might have to look at a U.S. source if that’s possible,” Powell said.
Sourcing domestically could be challenging, Powell said, because if there’s a high volume of customers shifting to American suppliers, the demand will likely cause prices to spike.
“Tariffs in general will have an impact on input costs for construction,” said Jeffrey Michael, the executive director of the Bureau of Business and Economic Research at the University of Montana. “The general impacts from China and Canada could be on lumber, cement and other components. There’s a lot of uncertainty of how it will work out.”
Northwest Montana’s wood products mills could see a boost as suppliers shift to buy domestically, but the tariffs will still likely add a percentage point to annual U.S. inflation, Michael said.
“If you have specific supply relationships, that could be impacted and some businesses have to adjust to that,” Michael said. “Some businesses already have to figure out if they can readjust supply chains and adjust for the costs. One of the goals is to encourage domestic production and source inputs from domestic suppliers. Sometimes that’s possible and sometimes it isn’t. It’s definitely an adjustment process that will raise costs for business overall.”
At the Montana Contractors Association, Executive Director David Smith said the uncertainty surrounding tariffs right before the busy construction season creates challenges for contractors, especially since bids have already been awarded and prices have been set.
“That’s not a good way to be entering construction season – not knowing if materials are being taxed more,” Smith said. “The bottom line is we need certainty.”
To compensate for added costs, Smith said some contractors will push owners to redesign or shrink projects that have already begun.
“Once the owner decides they are all in, it’s hard to stop a project,” Smith said. “But they look for ways to trim the project back. It’s that uncertainty that causes anxiety.”
While tariffs on wood products have not yet been imposed, the levies are planned to go in effect next month, raising the nationwide cost of imported construction materials by more than $3 billion, according to the National Association of Home Builders (NAHB).
Canada and Mexico account for 70% of total lumber and gypsum imports while steel and aluminum for products like refrigerators and washing machines come from China.
The policy uncertainty has caused a drop in nationwide builder confidence as recent tariff actions have an average cost impact of $9,200 per home, according to NAHB. But Flathead developers are still waiting to see what happens.
“We are anticipating increases in our costs because of tariffs, but we are not sure to what extent they will impact us,” said Miles Terry, the vice president of Terry Homes.
On top of the tariffs, homebuyers are still grappling with mortgage rates that are hovering around 6.5%.
But despite the expensive building costs and contractors leery of tariffs, it has not impacted construction demand in the Flathead Valley as clients with deep pockets continue to keep builders busy and ongoing projects continue.
“If you look at the sensitive market – stuff in city limits and starter homes – any interest rate tick or tariff could take them out of contention,” Blake Robinson of the Flathead Building Association said. “It’s more folks building in the country and whether it’s interest rates or tariffs – they are not worried. Those are the people keeping builders on jobs for a couple years at a time.”
Smith at the Montana Contractors Association, too, said contractors are staying busy as demand remains strong.
Housing trends have remained somewhat stagnant in the last year, with February’s median home price in Kalispell rising slightly to $557,500 compared to $539,500 during the same month in 2024. Last month, 49 sales closed in Kalispell compared to 48 in February of 2024.
After the pandemic-induced construction boom in 2021, building leveled off but remained steady through last year with the total value of construction in Kalispell at $120 million compared to $126 million the year prior.
“Builders are still pretty bullish on the future, and they still have lots of people calling,” Robinson said. “I haven’t heard too much concern.”