The Impacts of the Trump Administration on Infrastructure: Federal Funding, Tariffs, and More

In a country where political divisiveness seems to increase by the hour, infrastructure is one of the few issues to receive ongoing bipartisan support. During the Biden administration, the Bipartisan Infrastructure Law (BIL) (also referred to as the Infrastructure Investment and Jobs Act) marked a historic, $1.2 trillion investment in our nation’s infrastructure. Its passage was celebrated across the political spectrum, with President Biden declaring it “the enemy of potholes everywhere."

But despite a history of bipartisan support, questions remain for the infrastructure industry. Will those BIL funds continue to be distributed? Will a reduced emphasis on regulations improve project efficiency? How will President Trump’s expected tariff plan impact construction costs? In this article, we’ll take a look at everything Trump has said and done to date in an attempt to predict how infrastructure construction will be impacted over the next four years.

Looking back at President Trump’s first term

Let’s take a quick look back at Trump’s first four years in office. While no major infrastructure legislation was passed, there were some executive decisions that may impact how Trump’s administration approaches infrastructure funding during his second term:

• In 2018, Trump proposed an infrastructure plan that included $200 billion in federal funding, with additional financial support coming from private investment and state and local funding. Due to the emphasis on state and local funding, Democrats opposed this plan, and no legislation was passed.

• In 2020, Trump extended the Obama-era FAST Act to ensure continued funding for surface transformation programs. This legislation was considered a stop-gap solution as Congress developed a long-term plan for infrastructure funding.

• Throughout his administration, Trump signed several orders aimed at increasing the efficiency of the federal permitting process. These included orders to complete environmental reviews within two years, expedite compliance, and roll back the federal oversight of waterways.

Trump’s extension of the FAST Act happened during negotiations to prevent a government shutdown, but may be an indicator of how his administration approaches the continued distribution of BIL/IIJA funding. His efforts to cut red tape during the permitting process are expected to continue.

An overview of IIJA funding distribution

No one knows exactly what will happen to IIJA funding when President Trump takes office. What we do know is this:

• 47% of IIJA funds have been announced, with the Biden administration accelerating distribution ahead of the upcoming change of administration

• Trump has been quoted about scaling back various Biden-era and Obama-era legislation, but he has not called out infrastructure specifically, referring instead to immigration, climate oversight, healthcare, and AI regulation policies

• While organizations like the Global Infrastructure Investor Association foresee a potential re-allocation of funds and an emphasis on private partnerships, they do not expect serious impacts to IIJA funding due to how much Republican-leaning states have benefitted

To enforce that last point, over 75% of the $268 billion allocated in IIJA for clean energy investments has gone to Republican-leaning states. So, even with Republican-led efforts to cut back on renewable resources in favor of modernized pipelines and refineries, there is a good chance that IIJA funding continues to be distributed as expected throughout his administration. AECOM CEO Troy Rudd echoed this in a Q4 earnings call, stating that “infrastructure investment is a bipartisan priority, and we do not foresee this changing.”

An emphasis on permitting reform and reducing red tape

Considering the array of Executive Orders aimed at permitting reform that President Trump signed during his first administration, there is reason to be optimistic that his second term will bring a similar reduction in red tape. Some expect the new Department of Governmental Efficiency (DOGE), headed by Elon Musk and Vivek Ramaswamy, to focus on streamlining regulatory processes and reducing compliance requirements. Here’s a quick overview of the Executive Orders aimed at permitting reform that Trump signed during his first term in office:

• In January 2017, he signed an EO directing federal agencies to expedite environmental reviews for significant infrastructure projects

• In April 2019, he signed signed two executive orders aimed at accelerating energy infrastructure projects by simplifying the approval process

• In January 2020, he signed an executive order granting federal agencies emergency powers to fast-track infrastructure projects, including energy and highway construction, by overriding certain environmental regulations

The issue of permitting reform is a high priority for the construction industry - both horizontal and vertical - as a recent survey by the National Multifamily Housing Council found that 81% of developers reported delays due to slow permitting approvals. In a Q4 fiscal earnings call with AECOM, CEO Troy Rudd emphasized the expectation that the Trump administration will address permit deregulation, referring to a slow permitting process as “one of the greatest bottlenecks to infrastructure investments” and stating that “simplification would increase the volume of project opportunities.”

The impact of potential tariffs on construction costs

Shortly after the election results were finalized, the Google search volume for “tariffs” skyrocketed. Much of the economic focus of President Trump’s campaign honed in on tariffs, with a proposed blanket 10 to 20 percent tariff across all imports into the US as well as an additional tariff of 60 to 100 percent on Chinese goods. Most recently, Trump suggested a new 25 percent tariff on imports from Mexico and Canada, with Mexico responding in kind. So, how will these anticipated tariffs affect the construction industry?

The United States imported $675B in industrial supplies and materials in 2023. Let’s take Canada as an example, since the country accounts for 33% of these imports and was specifically called out by the new administration. Canada currently accounts for ~30% of lumber imports, 60% of crude oil imports, and 10% of cement imports. It’s worth noting that the 25% increase wouldn’t take place across the board. For example, there is already a 14.54% import tax on Canadian softwoods, so that tariff would increase by ~11%, not an additional 25%. Still, it’s easy to see how construction costs may be impacted.

It’s not just the imported goods that may be at risk of inflation. In a recent interview, Ken Simonson, Chief Economist of the Associated General Contractors of America (AGC), stated that “new or increased tariffs have the potential to raise prices for a wide range of construction inputs, including items produced domestically that compete with imports.”

One silver lining? Economist Joe Brusuelas noted that these sort of import taxes are “almost always” felt most by the consumer. So, while your trip to the grocery store may cost more, your trip to the contractor supply may be less impacted.

Trump’s goal in instituting these tariffs is to spark “an American manufacturing boom” as he stated during a September rally. There is some debate among some economists about whether or not this will be the outcome, but many U.S. suppliers support this strategy. “So many jobs I lose because the price-sensitive purchasing manager gives the job to the Chinese vendor rather than us," said Drew Greenblatt, president of Marlin Steel.

“I’m going to start winning all those jobs.”

A brief look at upcoming cabinet appointments

Another way to get a sense of President Trump’s infrastructure policy is to examine who he has appointed to significant and relevant positions in his cabinet. Let’s take a look:

• Sean Duffy
  Secretary of Transportation
  Former Wisconsin congressman, Fox Business host
  
  Co-sponsored bipartisan legislation to build the largest road and bridge project in Minnesota history
  
• Lee Zeldin
  Environmental Protection Agency Administrator
  Former New York congressman, gubernatorial candidate
  
  Voted for the Obama-era FAST Act, focused on permitting reform
  
• Lori Chavez-DeRemer
  Secretary of Department of Labor
  Former Oregon Congresswoman
  
  Served on the Transportation and Infrastructure Committee, voted to expand labor union rights

As the construction industry prepares for the next four years, no one can predict the exact impacts of the Trump administration on infrastructure funding, permitting processes, and material costs. However, the bipartisan nature of infrastructure investment, combined with the benefits Republican-leaning states have reaped from IIJA funding, suggests that a complete overhaul is unlikely.

While potential tariffs and permitting reforms are wildcards, they highlight the need for industry stakeholders to remain agile and engaged with policy developments. Staying informed and adaptable will be crucial as we navigate this next chapter in American infrastructure development.