How Subcontractors Can Protect Margins When Tariffs Raise Material Costs

You know the feeling when you walk a job site, look at a stack of material, and realize it cost more than you budgeted. It is not always a bad estimate. Sometimes it is timing. Between bid day and delivery day, pricing shifts fast, especially when tariffs change.

That is what makes tariff-driven spikes so punishing for subcontractors. You are committed to scope, labor, and schedule, but your material costs are moving under your feet. Even when the price change is “industry wide,” the question is still personal: who pays for it, and how do you keep it from erasing your margin?

This is where better financial visibility matters. You cannot control trade policy. You can control how quickly you spot cost changes, forecast the cash impact, and build the documentation to recover what you can.

This rise in materials is not a fake news story. The Associated Builders and Contractors reported that iron and steel prices were up 9.2% year over year, and copper wire and cable prices were up 13.8% year over year (ABC.org). It is important that subcontractors have a plan for how to deal with rising material costs. This is where AI can be useful. 

How AI Helps Subcontractors Navigate Tariff Spikes

1) Catch the creep before it becomes a margin leak

When prices spike, the danger is not always a single massive invoice. It is the quiet creep across dozens of purchase orders and progress billings. By the time accounting sees it in a month-end review, the money is already gone.

Cru, Constrafor's AI CFO agent, helps by flagging unusual cost variances earlier, based on your historical patterns and the data flowing through your workflows. The goal is simple: give you a chance to pause, validate, and respond before you approve and pay.

What that looks like in practice:

• An invoice comes in above your normal unit cost range

• Cru highlights the variance for review

• Your team decides whether to dispute, negotiate, or approve with a note and a recovery plan

2) The invoice that should not be “routine”

Let's talk through an example....Imagine an electrical subcontractor on a mid-rise project.

• You bid the job with a supplier quote for copper wire and cable.

• Two weeks later, a revised supplier invoice arrives with higher unit pricing and a note that pricing reflects updated import costs.

• The invoice is not outrageous enough to trigger panic, but it is large enough to quietly take a bite out of the job.

Instead of approving it as “just the latest price,” Cru flags the unit-cost variance. That gives your team time to:

1. Call the supplier to confirm what changed and whether there is any flexibility

2. Update the job forecast so you see the downstream cash impact, not just this one bill

3. Start a change-order support package while dates and documentation are fresh

That is the difference between finding the issue early versus discovering it after the margin is already spent.

3) Replace napkin math with scenario planning

Tariffs create uncertainty, and uncertainty creates rushed decisions. Do you pre-buy to lock pricing and strain cash? Do you wait and risk another jump?

Cru’s forecasting helps you pressure-test scenarios against your real cash position. For example:

• What happens if key materials rise 10% next month?

• How does that affect payroll timing, supplier payments, and your cash runway over the next 30 to 60 days?

• Can you take on the next job confidently, or do you need to protect liquidity?

This is how you shift from reactive to deliberate. You are not guessing. You are choosing.

4) Contract and recovery: treat notice and documentation as part of the work

Most subcontractors have some form of escalation language somewhere in their agreements, but recovery often fails for two reasons: timing and proof.

Timing (notice requirements): Many contracts require prompt written notice when you encounter a cost impact. If you wait until the end of the month, you may lose leverage or miss the window entirely.

Proof (the change-order package): When you ask for an adjustment, the General Contractor and owner will want a clean story with dates. The stronger your documentation, the faster the conversation moves.

A solid recovery packet usually includes:

• Original supplier quote(s) and the date received

• Purchase order date and delivery date

• Revised quote or invoice showing the increase

• Supplier communication tying the increase to tariff or import-related changes (even a short email helps)

• Job-level impact summary (what scope, what quantity, what delta)

Cru helps by keeping costs, invoices, and project records organized in one place, so you are not reconstructing history across inboxes and folders when it is time to submit.

Do not let volatility quietly torpedo the job

Tariffs and price swings are not going away. But the damage is not inevitable.

When you can spot cost changes early, forecast the impact on cash, and build a clean documentation trail, volatility becomes a managed risk instead of a margin surprise.

You cannot control prices. You can control whether they catch you late.

If you want earlier visibility into cost variances and the cash impact across active jobs, book a Cru demo to see how variance review, forecasting, and documentation work in a subcontractor workflow.