Tariffs are anticipated to alter the economics behind constructing factories. IKO North America, a manufacturer of roofing products, embarked on a building spree in the U.S., completing one plant and having four more in progress. However, the situation changed when President Trump imposed tariffs on U.S. trading partners.

The CEO, David Koschitzky, stated that the recently completed Texas factory is now facing increased costs due to higher steel prices, and the ongoing projects require machinery not manufactured in the U.S. Even though the company plans to proceed with the projects, the tariffs will significantly raise the expenses.

The tariff announcement by Trump disrupted the plans of factory builders and complicated the government's efforts to revive U.S. manufacturing. Companies are reevaluating the financial aspects of planned factories or pausing them altogether.

The escalated construction costs resulting from tariffs led to the cancellation of a $300 million plastics recycling plant in Erie, Pa., after being in development for four years. International Recycling Group, led by CEO Mitch Hecht, cited the new duties on materials and imported machinery as a reason for the factory's cancellation, as they created higher-than-expected project costs.

Over the past few years, there has been a surge in factory investments in the U.S., fueled partly by substantial subsidies from the Biden administration for manufacturers in the semiconductor, electric vehicle, and renewable energy sectors. Companies have been keen on streamlining supply chains that were strained during the Covid-19 crisis.

Despite Trump's policies, the value of construction related to manufacturing continued to increase in early 2025, reaching a record $233 billion last year. Administration officials argue that persistent trade imbalances have negatively impacted domestic manufacturing and reducing reliance on imports will promote economic growth.