ATLANTA – What will a second Trump administration mean for the construction industry and the practice of construction law? Third Thursday sat down with R. Lee Mann III, partner at Kilpatrick Townsend & Stockton LLP, and leader of the firm’s Construction & Infrastructure Projects Team, to get a sense of the key issues that attorneys and builders may face.

Third Thursday: What might the regulatory environment look like under Trump?
Lee Mann: Based on Trump’s first term, it is highly likely that regulatory restrictions will be significantly relaxed compared to the Biden administration, especially with regards to environmental and permitting issues. We will have to wait to see what happens but based on things promised in the campaign, and given some of Trump’s proposed Cabinet selections, we should expect deregulation across the industry. For example, it appears that Elon Musk will be involved in a role of improving efficient of the government and cutting red tape, and that likely means deregulation.

Third Thursday: What might that look like?
Lee Mann: It appears there will be an effort to reduce the red tape in Washington and create a more business-friendly environment.

Third Thursday: What are some specific examples that come to mind?
Lee Mann: We could see reduced problems in getting pipeline projects permitted. Some pipeline projects have been hamstrung by permitting requirements for years. We could also see reduced enforcement and involvement by OSHA and a more pro-business approach—as opposed to a pro-labor view—from the National Labor Relations Board (NLRB) and other federal agencies such as the Equal Employment Opportunity Commission (EEOC). We could potentially see less focus on DEI initiatives and the reduction or elimination of set-asides or preferences for minority businesses. We may see lower taxes and that could lead to growth—or not—depending on whom you believe.

Third Thursday: What industries within construction would benefit?
Lee Mann: The clearest winner will be the oil and gas industry, including pipeline projects. Those projects were basically shut down during the Biden administration, and one of the big pitches by the new administration was that we need to reopen our oil and gas industries, particularly pipelines. Conversely, we could possibly see reduced incentives for alternative energy projects. Things like solar, wind, and those initiatives and tax credits could go down. But on the other hand, since Elon Musk is heavily involved, he may want to push a lot of those things forward so that they are alternative sources of electricity needed for electrical vehicles and for artificial intelligence.

Third Thursday: What about relations with China?
Lee Mann: The elephant in the room is China. To be clear, this has been an elephant in the room for the Biden administration too. Some say that China has to make a decision on whether to invade Taiwan by 2027; that 2027 is a go or no-go point for them. An invasion could break the semiconductor supply chain because TSMC (a major semiconductor supplier) is located there. But regardless of Taiwan, we appear to be heading to an even more strained relationship with China. Chinese investment into the U.S. is also likely to be heavily scrutinized, as it was under the first Trump Administration.

Third Thursday: What about the effects of high tariffs levied on China?
Lee Mann: President Trump has said that he’s going to increase tariffs on goods imported from China. As a result of the tariffs, we could see increases in the price of goods that are required for construction projects, such as drywall, insulation, roofing, some steel products, and some materials that are used for solar power projects. Any products that are subject to tariffs could see a quick increase in price, which would affect contractors with fixed-price contracts, especially if they are long-term contracts. If we get into a trade war with China, the impacts could be even larger.

Third Thursday: Do contracts usually address the possibility of tariffs?
Lee Mann: Some contracts contain changes-in-law provisions that allow contractors to recover extra costs resulting from a change in law. But many contracts, and probably even most contracts, do not contain changes-in-law provisions. Those that do often have highly differing wording about what constitutes a change in law. In some contracts, if there’s a change in law, then an increase in the cost of material could be the basis for a contractor to get a price adjustment.

There’s going to be a legal issue about whether the imposition of tariffs or price increases would be a basis for an equitable adjustment by the contractor under changes-in-law provisions or otherwise.

Third Thursday: Do you think there could be renewed interest in the Buy American Act?
Lee Mann: Implementation of the Buy American Act has seen a number of changes over the last few years with an increased focus on closing loopholes. It is reasonable to assume that increased focus will continue. Forcing contractors to use goods and materials from domestically sourced manufacturers could lead to increased growth in the U.S., but it could also lead to increased prices or shortages and regulatory compliance enforcement.

Third Thursday: What about the issue of labor?
Lee Mann: I think we’re going to see a pro-business attitude from the new administration. It will be less labor-focused and less employee-focused. We will probably see different people in charge at the NLRB and the EEOC. There may be less restrictions on whom you employ and the regulations on employment, with the possible exception of residency restrictions. There is the potential for some labor shortages.

Third Thursday: Why would labor shortages be on the horizon?
Lee Mann: You could end up with labor shortages, especially in some industries like concrete, masonry work, and framing work that potentially may have been using some undocumented workers. That could result in increased cost of labor for contractors. In kind of the reverse of the deregulation side, you could see increased focus by government agencies on verification of the residency status of workers. If you have mass deportations and reduced illegal immigration, you may have a reduced workforce at the lower levels of some trades.

In addition, you could have increased growth and additional spending on construction as a result of any number of things, which could be tax credits that are issued to spur growth or additional spending authorized by the new administration for infrastructure. Or if you have reduced permitting requirements for pipeline projects, you could have a bigger demand for labor for those projects. Putting those two things together—the potential for increased demand but with a reduced supply of workers—could result in increased labor costs for contractors. That again raises the question of whether contractors will have a contractual or other basis to recover any additional costs incurred on their projects. It will turn on the language in their contract and whether any of these things are actually deemed to be a change in law.

Third Thursday: What types of scenarios do you foresee?
Lee Mann: If you have undocumented workers who are deported, owners will argue that enforcing an existing law on illegal immigration does not constitute a change in law. Contractors would view that much differently when they’ve lost a portion of their workforce. There’s some uncertainty there, but whenever there is potential for increased growth and the potential for reduced supply of labor, there is a potential for increases in the costs for labor.

Third Thursday: What are the potential timeframes for these changes?
Lee Mann: In the past, it has taken a long time for legal changes to take effect. For instance, legislation would be required from Congress, or new regulations would be enacted only after a period for comments. It can take a long time for things to play out, which gives contractors and owners time to adjust to upcoming new laws or regulations.

Third Thursday: Could Trump upend that traditional timeline?
Lee Mann: There is potential for things to happen much more quickly now. Trump may issue Executive Orders that implement new things quickly. Mass deportations or tariffs could happen quickly. Or you could have a situation where the administration wants a change and Republican-controlled Congress passes new laws much more quickly that in the past.

Contractors working under fixed price contracts, and especially long-term fixed priced contracts, might not have time to adjust their pricing. They could see these changes occur very quickly and then be left holding the bag for their increased costs. Which again leads them back to the question: Is there basis to recover those additional costs based on changes in law or other provisions in their contracts? It could be a wild ride for the construction industry.

Lee Mann is a partner at Kilpatrick Townsend & Stockton LLP and leader of the firm’s Construction & Infrastructure Projects Team. The team has earned top national and state rankings from Chambers USA for the last 12 years, including three nationwide “Construction Law Team of the Year” awards. The team is ranked National Tier 1 by U.S. News-Best Lawyers “Best Law Firms” and earned top rankings – both National Tier 1 and Recommended Firm – from Legal 500 US (2015-2024).