The newly-elected Donald Trump administration is set to influence the construction industry in the US through a mix of fiscal stimulus, reduced immigration, and shifting trade policies, according to economists from Oxford Economics.

Ahead of Trump's January inauguration, Oxford Economics analyzed the potential impact on global construction markets under his leadership. The firm's economists predict that the near-term outlook for privately funded construction will likely benefit from increased fiscal expansion, including tax cuts, interest rate reductions, and additional federal spending on defense. However, they anticipate fewer rate cuts by 2026 due to rising debt and inflation, which could slow investment and construction activity in the long run.

While the immediate outlook looks positive, Oxford Economics also highlighted some risks. They pointed out that cuts to immigration could lead to a drop in housing demand, while also exacerbating existing labor shortages in the construction sector.

The firm also voiced uncertainty regarding Trump's trade policies, particularly the imposition of higher tariffs intended to protect US manufacturing. While they forecast these tariffs might spur manufacturing and warehousing investments in ASEAN countries, the overall impact on the US economy will depend heavily on retaliatory tariffs from other nations.

Furthermore, Oxford Economics expressed concern over the shifting geopolitical landscape under Trump, particularly regarding the US’s stance on net-zero policies and the ongoing Russia-Ukraine conflict. They warned that such changes could increase global uncertainty, potentially delaying or canceling construction projects around the world.

Oxford Economics presented two potential scenarios in its global GDP forecast: “limited Trump,” which assumes a more moderate set of policy shifts, and “full-blown Trump,” which represents a scenario where more extreme measures are taken, particularly if the Republicans gain control of Congress.

Nicholas Fearnley, head of global construction forecasting at Oxford Economics, stated, “US fiscal expansion is likely to support privately funded construction activity in the near-term, but will result in slower monetary loosening in 2026. Immigration cuts, however, will reduce long-term demand for housing, and risk exasperating construction labour shortages in the US.”

On the subject of tariffs, he noted, “We expect them to boost manufacturing and warehousing investment in ASEAN countries, while the impact in the US depends on the extent of retaliatory tariffs from other countries. China may continue to reroute US-bound exports to other countries - but there could be a reduction in Belt and Road projects.”