Colorado’s construction industry is feeling the squeeze. A report from Governor Jared Polis’s Office shows how quickly things have changed. Colorado’s effective tariff rate climbed from about 3% in 2024 to more than 21% in 2025. That sharp increase is squeezing builders across the state, driving up costs, delaying projects, and making it even tougher for families to find affordable homes.

Rising costs of new homes

Tariffs on steel, aluminum, and copper are driving up material prices by as much as 20-40% compared to just a few years ago. For homebuyers, this translates into a 4-6% increase in new home construction costs. On a $750,000 home, that’s an added $30,000 to $45,000, a heavy burden in an already pricey market.

Contractors say the higher costs are making it difficult to keep projects on budget. Some are delaying builds, while others are scaling back plans to manage expenses.

“This detailed report makes clear what Colorado families are already feeling: Trump’s tariffs are a tax on hardworking people and businesses that hurts our economy and state,” said Colorado’s Governor Jared Polis. “From groceries to housing to health care, Coloradans are sadly paying more because of the President’s reckless trade war.” 

In addition to higher prices, contractors are also dealing with slower deliveries. Many suppliers now take weeks longer to ship basics like steel or aluminum. When materials arrive late, construction schedules are stretched out, which often means crews are kept on site longer and payroll costs rise. For homeowners and developers, this adds frustration and uncertainty about when projects will actually be completed.

Labor shortages add pressure

Immigration crackdowns are compounding the problem. Nearly 20% of Denver’s construction workforce is made up of noncitizens, according to Census data. A recent survey by the Associated General Contractors of America found that almost one in four Colorado firms has lost workers due to federal enforcement actions. Fewer hands on deck mean slower builds, and the shortage of skilled labor is making it harder to meet demand.

While large firms can sometimes absorb rising costs, small contractors are being hit hardest. Many don’t have the resources to hedge against volatile prices or withstand long delays. For smaller operations, even modest increases in costs can make the difference between staying afloat and shutting down.

The ripple effects are also showing up in permit data. Analysts report that fewer building permits are being filed, signaling a slowdown in new projects. If the trend continues, it could further strain Colorado’s housing market and slow economic growth tied to construction.

Colorado’s $33 billion construction industry is critical to the state’s growth, but tariffs and labor shortages are creating serious roadblocks. Rising material costs, disrupted supply chains, and workforce challenges are making it harder and more expensive to build. Without relief, small contractors and homebuyers alike may continue to bear the brunt of these policies.

“Colorado will continue to fight for families, businesses, and jobs by calling out these harmful policies,” Polis said. “This report gives us data to better understand the damage tariffs are causing Colorado’s economy and encourage our members of Congress to stand up and support trade.”

Stay ahead on the latest construction news and insights! Subscribe to our newsletter.