Architect Advocates: Incoming tariffs, low billing index pose an uncertain future

Emily Whitty: Housing crisis and tariffs will lead to increased construction costs.

There’s one word on the mind of architects across the nation: tariffs. With the impending increase of import taxes on critical materials from Canada, Mexico and China, firms are preparing for the worst and identifying best methods of coping. The Architecture Billing Index, a monthly survey gathering billing data from firms nationwide, is already low at 44.1 as of Jan. 22. An ABI score of less than 50 signifies decline, and architects are concerned about how backlogged, current and future bids will be further impacted by increased prices.

“It’s going to hit the architecture industry whether we like it or not,” said Emily Whitty, president of the American Institute of Architects Springfield and architect at Dake Wells Architecture Inc. “Putting 25% tariffs on exported goods from other countries when we so heavily use those materials in the construction industry, we are going to take a hit on that. … We’re already in a housing crisis and home prices are going to go up.”

On Feb. 1, the Trump administration announced an additional 25% tariff on imports from Canada and Mexico and 10% on China. Two days later, Trump announced a 30-day pause on Canadian and Mexican tariffs, however, in exchange for border and crime concessions from the two countries. A daily arrest quota was also issued to Immigration and Customs Enforcement of 1,200 to 1,500 undocumented individuals. According to a 2020 report by the NAHB Economics and Housing Policy Group, immigrant workers make up approximately 30% of the construction workforce.

“We have to be aware of these things because they are going to change the cost of everything in our life. Tariffs on materials and immigration on labor force could mean a steep increase on construction,” said Joshua Nason, dean of Drury University’s Hammons School of Architecture. “We are preparing for the unknown in some ways. We need to prepare students to not be pinned into the present mode of working. A lot of what we’re trying to do in architect education is foster a spirit of entrepreneurship where they can redefine their role. … As things change, that doesn’t mean the diminishment of the role of the architect.”

Jobs that are bid but awaiting materials and those actively bidding could be the most impacted by tariffs, said Stephanie Ireland, CEO and principal architect at Ireland Architects Inc. This is causing many contractors to purchase materials ahead of the tariffs and requiring serious conversations with clients.

“We are informing the owner of how the tariffs could affect the project bids,” Ireland said. “We don’t know that the contractor can buy the material for that cost. So, we are trying to inform them, No. 1, and say you probably need to have some money set aside for this just in case.”

All of this is on top of an already low billing index, which decreased every month except for two since October 2022, according to the ABI 2024 end-of-year report. Approximately 4,000 architecture jobs have been lost since 2022, 26% of firms reported an increase in significantly delayed projects and 18% reported canceled projects increasing – mostly in commercial and industrial projects. In December, the Midwest region, including Missouri, lagged behind other regions in terms of business conditions with a score of 48.1. Overall, however, AIA report respondents indicated that 72% of projects are proceeding as normal and Whitty said southern Missouri had a relatively good year.

“While not a full-fledged recession, this period of softness and uncertainty has been challenging for many firms. And prospects for future work remain soft as well,” reads the ABI report. “Although inquiries into new projects continued to increase at a relatively slow rate, the value of newly signed design contracts decreased further in December as clients remained hesitant to commit to new work.”

And that was before the announcement of impending and potentially impending tariffs.

“I don’t think everyone is panicking yet, I think it’s just they’re talking to the community trying to figure out what’s going on,” Whitty said. “If construction costs and labor costs go up this year, we’re going to have to work really well with our contractors and clients to figure out how to handle those situations because we won’t stop building. We will still need to do the project we have and there’s always going to be some sort of project going on.”

Laying the foundation
As Nason prepares future architects for the market, he looks to broaden perspective on what it means to be an architect and encourages adaptivity – something architects at any stage of their career can benefit from.

Whitty thought back to 2020 when architects saw their industry dip and had to do what they do best by getting creative with solutions. Building did not stop then and she does not expect it to stop now, but firms will have to think outside of the box and work together.

“It really comes down to our relationships with each other, building those because we’re going to have a lot of hard conversations in the next years with projects that have been started that already have costs associated with them,” Whitty said.

Ireland said firms may look at neighboring states where billing index numbers are higher along with diversifying project types to expand into new areas of design. Investing in relationships with current, repeat customers also well for firms, she agreed with Whitty. Negotiating fees and billing property for those jobs, however, is key. Underbilling is chronically problematic in the world of architecture, Nason said, and encouraged architects to become advocates for their industry and for the public. Architects are advocates, Whitty agreed. They always have been and must continue to be now.

“Architects are always going to be advocates for the health, safety and welfare of the general public,” she said, encouraging firms to get involved with organizations such as the Urban Land Institute and becoming involved with city governance. “There are always board positions available at the city that are great to have community members on and the AIA also does try to do some community outreach every year.”

The future is uncertain and Nason has a school full of architects who he’s responsible for, doing what he can to send them into the world with some sort of hope. He said he does not need to look far for that hope, despite mounting concerns and an uncertain future.

“There is so much right in front of us and the real crux of architecture is that this is a creative field and everybody that enters our field has a moment of genius and creativity,” he said. “We can look through these constraints and find a way to make a beautiful and meaningful impact on people’s lives.”