HONOLULU  — Hawaii state officials are actively monitoring the potential effects that tariffs could have on local construction projects, with concerns rising over the financial implications.

The Department of Accounting and General Services (DAGS) has indicated that certain projects may need to scale back their scope in order to stay within budget limits, particularly if national tariffs push up the cost of local goods and materials.

How Tariffs Could Impact HawaiiDAGS has a budget of approximately $1.8 billion for projects that are currently in the design phase. This budget, however, is fixed, meaning that if the prices of construction materials rise due to tariffs, costs will have to be trimmed, potentially leading to smaller-scale projects.

“So always our first choice when we have to cut costs is to cut the scope of the project. Typically, our projects are sized to provide the spaces necessary to provide services to the people of Hawaii,” said DAGS Public Works administrator Gordon Wood.

According to DAGS officials, steel and aluminum tariffs in particular could have the most significant impact on Hawaii's construction industry — especially for projects that have not yet entered the construction phase.

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The timing of price increases remains uncertain, however.

“That’s a really great question. I think that’s the billion-dollar question, right? As it relates to tariffs and how it’s going to impact us. We simply don’t know. Right? Because until something is finalized and, you know, the tariffs are either in play or they’re not in play, really speaks to that question,” said DAGS comptroller Keith Regan.

Supporters of the Trump administration’s tariff policy argue that such measures would be reciprocal, and that tariffs are a way to ensure fair trade practices.

What are Tariffs and How Do They Work?“So what you charge us, we’ll charge you. That’s fair trade. If they want it to be free trade, which would be ideal for everyone, then they should remove their tariffs on us,” said House Minority Floor Leader Rep. Diamond Garcia. “Foreign companies from across the globe are now moving to America to invest, build, and operate. That’s good for America’s economy.”

DAGS also pointed out that major upcoming projects in Hawaii — including the construction of a new prison on Oahu and a replacement for the aging Aloha Stadium — are expected to require significant amounts of steel and aluminum. However, the final costs and possible delays of these large-scale projects will depend on whether tariffs remain in place or escalate.

“We’re already struggling with the budget on that and there’s going to be a lot of steel there,” said Gordon Wood. “Even the new stadium there will be a lot of steel, and so as the prices of materials go up, that stadium is going to get smaller.”

The costs of such projects have already been a major concern, and higher material prices could further complicate efforts to keep the costs within the approved budgets.

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Looking back at President Trump’s previous term, supporters argue that tariffs did not harm the economy as much as some critics have suggested.

“There’s a track record. President Trump served for four years previously and he implemented tariffs, and the economy did not suffer the way that the media currently is painting it out to be,” said Rep. Diamond Garcia.

The ongoing situation remains fluid, and Hawaii officials will continue to monitor the potential effects as new developments unfold.

Originally reported by Bryce Moore in KHON 2 News.