TRG | The Bottom Line – 4/25

TRG had multiple conversations this week with private companies across the construction value chain to connect on how they are navigating the volatile conditions in the market. This includes private manufacturers of heavy materials, roofing, insulation, flooring, and related building products. Reactions were mixed in terms of tariffs, ranging from just a distraction to real cost impacts already. Most contacts were able successfully pass on price as needed even into choppy market demand. Companies should have a more resilient supply chain in place now after having gone through a similar exercise during COVID and are continuing to look at adjusting suppliers and shifting production out of high tariff countries. Notably, almost all companies with Chinese manufacturing exposure has reduced it meaningfully and have been shifting to other countries like South Korea, Vietnam, and India. In terms of Q1 performance, the quarter shaped up okay, with weather impacting January and February, while March and April were the months that started to see tariff and inflation impacts. It has been difficult to gauge the true end market demand at time given pre-buys ahead of price increases and then a lull afterwards, but most contacts agreed on this: Thing feels worse than they are.