Precast manufacturers are operating in a cost environment shaped by two converging pressures: tariff policy that continues to raise the floor for steel-intensive inputs and an energy shock from the U.S.-Iran conflict that is driving up fuel, freight and energy-sensitive costs across the supply chain. That combination compresses margins in the near term and also reinforces precast’s competitive position in publicly funded infrastructure markets where domestic sourcing requirements are tightening.
The administration’s April 6 proclamation added another layer to an already complex tariff structure, restructuring Section 232 tariffs on steel, aluminum and copper to apply duties to the full customs value of imported products rather than just the metal content. Steel articles remain at 50%, with certain derivatives at 25% and a transitional 15% rate for metal-intensive industrial equipment through 2027.
A separate 10% Section 122 surcharge on most imports took effect on February 24 and is scheduled to expire on July 24 unless Congress extends it, adding another layer of cost. For precast producers, the net effect is continued cost uncertainty on reinforcing steel and embedded metals, with limited near-term relief.
Energy costs compound the tariff pressure, led by the effective closure of the Strait of Hormuz since U.S.-Israel strikes on Iran began February 28, disrupting a chokepoint that normally carries roughly 20% of global oil supply. The U.S. Energy Information Administration (EIA) reports that Brent crude spot prices averaged $103 per barrel in March, with daily prices reaching nearly $130 by early April. EIA forecasts that national diesel prices will approach $6 per gallon in April, with California prices already running well above that level. Heavier precast products compete within a delivery radius, so elevated fuel costs directly increase transportation costs, narrowing the range in which products remain competitive.
Despite the cost pressures, the opportunity side remains strong. FMI’s construction put-in-place forecast shows nonbuilding infrastructure growing through 2030, supported by federal funding that continues to flow through the IIJA. At the same time, The Federal Highway Administration’s (FHWA) manufactured-products rule is steadily strengthening the domestic sourcing advantage for federal-aid highway work. The rule already requires U.S. final assembly for manufactured products on projects obligated on or after October 1, 2025, and the 55% domestic component-cost threshold takes effect October 1, 2026. Precast concrete products are specifically called out in the rule, with iron and steel components required to meet FHWA’s existing domestic iron and steel standards. For domestic precast producers, the ability to meet these requirements is becoming a meaningful advantage in federal-aid project procurement.
Federally funded infrastructure segments with tightening domestic content requirements remain the most durable near-term market for precast, and many producers are already adjusting bid structures and escalation language to reflect the current cost environment. So far this year, the market is defined by tariff layering, energy volatility and tighter sourcing rules. The case for precast is less about cost and more about being dependable, compliant and fast to deliver.
Brian Strawberry, a chief economist in the construction industry, leads FMI’s efforts in market sizing, forecasting, building products and construction material pricing, and consumption trends.