Expand Smarter: Churches, Tariffs, and the Rising Cost of Growth

The Church is experiencing an incredible amount of growth right now. This has created a need for more space and more sites. At Ministry Solutions Group, we’ve never been busier helping churches navigate the complexities of finances and facility strategies. 

Growing churches already have the challenge of navigating a building project where there is often a larger vision and need than there are resources. The uncertainty of the markets is creating even more challenges. Before the talks of cost increases due to tariffs and labor, construction costs were already projected to be 3-5% in 2025. For churches with a $10M vision, a $7M need, and a $5M budget, that’s already a challenge. 

Now, the markets are experiencing a degree of chaos which has caused that escalation to increase even faster. The purpose of this article is to identify what’s happening in the market, where the challenges lie, and how to overcome them. 

So, how do we plan for growth in uncertain times? Let’s identify the challenges. But first…

A Quick Disclaimer: This article in no way represents a political opinion. These facts are well-researched from over 20 of the most objective sources I could find (such as WSJ, AGC, CoStar, ABC, and Urban Institute). They may differ from your preferred news outlet, but the purpose of this article is not to weigh in on the condition or opinions of our political environment. Before working with churches, my background was in private equity and commercial real estate. It was my job to understand these types of things. Here’s what I’m seeing happen in church real estate at the moment.

Tariffs and Construction Costs Are Nuanced Challenges

Because of the demand in the construction industry, structural steel had already increased by around $40/ton since the beginning of the year — and that was before the tariff talk. Now, with the announcement of tariffs, there is speculation that steel prices could increase even more.

Nucor, an American-based company, just announced in June 2025 that they were increasing their prices due to things like:

• Their competition being priced out of the market.
• Larger control of the industry
• Increased demand due to the near elimination of foreign supply

In short, domestic steel companies can increase their prices just below the cost of imported steel and still be the cheaper option, so why would they not do that? 

It’s simple economics… if there is an increasing demand and a shortened supply, prices go up. It won’t happen all at once, but as long as the demand is not stifled by canceled and delayed projects, you can expect to see a continued increase in material prices to meet market demand. 

Here’s the thing you really want to brace for, though. Just like in 2018, once the suppliers discover that people are still willing to pay their higher prices, they have no reason to lower them later on. 

• Aluminum prices are up 15% YTD. 
• Copper prices are up 40% YTD. 
• Lumber and wood prices are up 20% YTD. 

Tariffs, or even the perception of the impact on tariffs, are not the only thing impacting construction costs, either. One of the other challenges churches are facing is in their soft cost budget. We’re talking about items like AVL (audio, visual, and lighting) and FFE (furniture, fixtures, and equipment). 

These comprise a large sum within the total project budgets. A lot of our seating, audio, visual, lighting, equipment, and fixtures are imported. This is not only causing uncertainty in pricing these items. It’s also impacting our supply chain and delivery times. 

A lot of these vendors are not allowing churches to pre-order or lock in prices ahead of time. The prices will be what they are when the items are ready to be ordered and shipped. That’s the harsh reality. No one is holding prices.

The big challenge here is not the increase in costs. There is nothing we can do to change that other than going back and either value engineering our projects or cutting scope. The real challenge for a lot of people, and one of the big questions people are asking us at MSG right now is: “But what is it going to cost in six months?” 

While there’s no easy answer there, you don’t want to assume that things will go back down. That’s always dangerous. There are too many variables.

The good news, if you want to call it that, is that the increase in prices has somewhat stabilized in late May and June. Many people associate that with the number of canceled or delayed projects nationwide, which has decreased the demand for materials in the commercial construction industry. 

Still, if you’re planning a construction project, it’s important to factor in both the short and long-term challenges of price increases and stubbornly high price points.

Labor and Deportation Are Also Major Factors

The American Builders and Contractors (ABC) organization estimated that we started the year 493,000 jobs short between the residential and commercial construction industry. This is due to several factors: 

• An aging workforce.
• A lack of interest from the younger generations in trade jobs.
• A shortabe in available training programs for those who are interested.
• Lingering COVID impact (Many construction workers left the construction industry during COVID, found other work, and never came back. )

Consider this. Last year, material prices actually came down by 2% from January to December. But the overall cost of construction? It was up close to 7% YoY. This means that the biggest increase in cost in 2024 was not in materials, but labor. 

We also ended the year with a housing shortage of 3.7M units. This shows there is just as much demand for labor in the residential construction market as there is in the commercial construction market. 

The source of labor is also a consideration here. Right now, the national labor market in construction in the US consists of 53% foreign-born laborers. 

I don’t care what side of the political spectrum you are on. The plain truth is that, if we remove that source of labor, it is going to have a significant impact on construction pricing this year. 

I recently saw a scary forecast that I hope is not true. Deportation could raise the shortage in labor from 439,000 to between 1.7M and 1.8M. Even if it’s a fraction of that total, that will significantly exacerbate an already existing problem.

The Impact of Tariffs, High Prices, and Labor Shortages on Churches

Of course, the big question here is: how does this impact you and your church? 

The areas most hurt by this are not the general contractors, where 92% of the people in executive and managerial positions within the construction industry are white. It’s the subcontractors who are going to be affected the most. 

As we’ve told many churches over the years, subcontractors run the construction industry and set the vast majority of the pricing. This is due to the high demand and lack of supply of labor. Right now, subcontractors have more job requests and requests to bid than they have people and time — and as the labor force dwindles, the cost for labor will only continue to rise. 

This presents a frustrating situation for church leaders trying to orchestrate growth and expansion projects. That’s why you need a clear plan in place every step of the way.

The Ministry Solution

Everything I’ve talked about so far sounds pretty bleak. But remember, with every challenge comes innovation. 

What we need to tap into that innovative problem-solving spirit is for churches to be smarter than ever when it comes to expansion and growth. Here are a few things to consider this year while planning for an expansion project: 

Set Up the Right Contingency Plans

Most people are familiar with this term. However, there are several different types of contingency. 

One of the most standard types of contingency is a design contingency. This is used in the early stages of design to allow owners to make scope or finish decisions that add cost to the project. Another common one is cost contingency, which allows money to be set aside for unforeseen expenses during construction. 

However, in today’s market, we would suggest two contingency plans that you haven’t considered before:

• Soft cost contingency: This is for items that typically can be pre-ordered and locked in months before delivery. However, considering that these items are mostly imported, prices are likely to fluctuate. You won’t know the real price until you are ready for order and delivery — so plan accordingly. 
• Tariff contingency: Tariffs don’t just affect foreign prices. They also impact domestic prices for all the reasons listed above. Plan on how to handle them if they come into play.

Consider Modern Mergers

The modern multisite movement is already a popular trend within the church world. It comprises over 50% of our current workload at MSG. 

Here’s the thing, though. The American Church doesn’t have an inventory problem. There are churches everywhere. 

One of the easiest and most cost-effective ways to grow and expand is through multisite and merger growth, where the majority of the cost is limited to deferred maintenance, updates, and renovations. 

For more information on mergers, check out our interview with Jim Tomberlin on How Churches are Scaling Smarter in 2025. You can also visit our page on multisite and mergers for advice and next steps in this key area. 

Local, Local, Local 

One of the biggest mistakes we see churches making right now is hiring out-of-town general contractors and design-build firms. This was already a mind-blowingly bad idea before the chaos of 2025. Now it simply doesn’t work. 

First, you don’t need a “church contractor.” You just need a really good contractor. 

Second, subs (who drive the construction market) have a steady flow of business from local and regional GCs. When they receive a bid from someone from out of town they have never worked with before, their loyalty will absolutely be with their GCs. They represent a steady stream of business.

The sub will either decline to bid because they are already overloaded with work, or they’ll put a higher price on the job. This is because 

• a) If you take it, they make more money on a one-off job.;
• b) They don’t get the job, and they still have a backlog of work. 

Subs not only price our market. They get to choose their jobs. Remember that.

You want to work with local general contractors who have buying power and a strong relationship with their subcontractor base. They should also have long-standing relationships with the Authorities Having Jurisdiction (AHJ) (those are the people in charge of saying “yes” or “no” regarding safety and compliance). 

Working with a local sub is also a huge help when it comes to the quality of work and warranties. Subs will be motivated to do a better job for the GC’s who are consistently bringing them business. 

The rebuttal I have heard on this from out of town GC’s is “our subs travel.” Right, and who pays for that again? Stay local.

Contracts are Everything

The most standard contract we use with general contractors is known as a GMP (Guaranteed Maximum Price). However, more and more GC’s, while using the GMP contracts, are inserting language that is closer to a Cost Plus contract. 

In that case, the pricing is not guaranteed and the GC is making a percentage markup over final cost due to market fluctuations. This allows for the cost of materials and labor to change during the project. 

This makes sense, and I can’t blame them for doing so. However, whenever you agree to terms, your contracts have to be ironclad. 

Going back to using local and regional GC’s and not out of town GC’s, you want your general contractor to buy out as many trades and materials as possible going into a long term contract. Also, beware of “contractor contingency.” This is where the GC holds back money to cover their mistakes, pricing fluctuations, or unforeseen expenses without your knowledge or approval. 

Efficiency and Activation 

Our specialty is helping churches fit 50,000SF of program space into a 40,000SF footprint to bridge the gap between vision, need, and resources. Efficiency in design is key. 

But here is another piece of good news…. We are not the only “industry” impacted by the same issues. While our shared space economy has grown from 14B in 2014 to a projected $335B in 2025, more and more other businesses, such as childcare, pickleball, medical office, coffee shops, indoor play spaces, gyms, retail, and others, have been impacted by the same economic challenges. 

People are looking to share space. Even better? They’re willing to pay for it. Their other option is to buy and build,  and the cost basis is prohibitive. 

We have these projects all over the country right now, where mission-driven third-party operators are paying six figures of annualized income to the church to use space. This happens Monday through Friday, while the church still uses these activated spaces on Sunday. 

For more information, check out some resources on Activated Spaces. 

Lead with Clarity

Too many churches design buildings before they know how they are going to pay for them. During uncertain times, clarity is king. 

So, before you go into a building project, have a financial strategy in place. Use it to drive your facility strategy, and not the other way around. 

This is clarity when it comes to programming, square footage, soft costs, fundraising, debt capacity, third-party income, and the like. 

Trust me. The last thing you want is to spend hundreds of thousands of dollars on a design and have to backtrack. I’ve seen it. 

We’ve also helped a lot of churches avoid that problem. We can help you, too! We strive to equip leaders to make great finance and facility decisions at critical moments. If you’re trying to plan a building project in uncertain times, we have the experience, resources, and knowledge to help you gain clarity before you put things in motion. 

For more information and next steps, check out our Clear Path Forward. I look forward to hearing from you!