As we look toward 2025, the construction industry faces a unique set of challenges shaped by competing forces. Tariffs remain a critical issue, with many materials and supplies either partially or fully manufactured outside the U.S. These tariffs could lead to escalating prices, particularly in areas like Southern California, where recent fires have already strained supply and demand. The interplay of these factors could create significant cost pressures both regionally and across the U.S. At the same time, energy costs present an opportunity to counterbalance these pressures. If gasoline and diesel prices can be brought below $4 and $2 per gallon, respectively, the costs of petroleum-based materials—such as plastics, PVC, and other hydrocarbons—could drop significantly. This would also reduce logistics costs, from transporting materials to job sites to the commutes of construction workers themselves. However, the ultimate impact depends on which factors take precedence and how quickly these changes unfold. Labor is another critical piece of the equation, with immigration policies playing a pivotal role. Non-union trades, which rely heavily on immigrant workers, could see shifts in workforce availability depending on how immigration laws evolve. These workers often enter the industry at lower wages, gain skills over several years, and eventually move into union positions, creating a cycle that depends on a steady flow of labor. Balancing fair wages with the need for affordable, reliable labor will be a key challenge for the industry. With so many moving parts—tariffs, energy prices, and immigration policies—the future of construction costs is hard to predict. As these forces compete, the industry will need to adapt and remain flexible, watching closely to see which developments take the lead in shaping the landscape. Sincerely,