State-Level Impacts of the 2025 Government Shutdown, Tariffs, and Potential Federal Worker Firings on the Sheet Metal Contracting Industry

Supply Chain & Material Cost Pressures

Tariffs on steel and aluminum are raising costs for fabrication shops and HVAC projects nationwide. For SMACNA members, this means higher bid prices, longer lead times, and more uncertainty in state and local project delivery. Contractors are reporting increased difficulty securing stable pricing and scheduling for sheet metal and HVAC components.

Labor Market Challenges

Uncertainty around federal workforce programs and contractor layoffs is straining the skilled trades pipeline. Apprenticeship and training programs connected to Department of Labor initiatives face slowdowns, and many states are reporting tighter labor pools. For contractors, this translates to higher labor costs and challenges meeting deadlines on both public and private projects.

State Snapshots

• California
  Tariffs are driving up fabrication costs for higher-ed, healthcare, and public works projects. Federal coordination on energy and environmental programs is critical in California, and potential staff reductions at DOE or DOL could slow retrofits and clean energy construction.

• Texas
  Strong growth in energy, manufacturing, and data centers is keeping demand high, but tariffs and supply volatility are inflating costs for HVAC and sheet metal systems. Federal funding delays could stall infrastructure projects, while labor shortages remain especially acute in fast-growing metro areas.

• New York
  Public building projects—including schools, transit facilities, and housing—depend heavily on federal support. Shutdowns or federal workforce cuts could slow approvals and funding streams, particularly in New York City and upstate areas tied to federal labs and defense work. Rising material costs are already stretching local project budgets.

• Massachusetts
  The state’s large higher-ed and healthcare sectors rely on advanced ventilation and sheet metal systems. Tariff-driven cost escalation is squeezing project budgets, while potential interruptions in federal research and energy-efficiency programs could slow retrofits and new construction on campuses and medical facilities.

• Illinois
  Chicago’s commercial and federal building markets are especially sensitive to GSA project delays. Tariff pressures are driving up fabrication costs statewide, and state/local budgets could come under additional strain if federal resources shrink. Contractors face a mix of steady demand and heightened risk in scheduling and pricing.

Impact of Mass Federal Worker Firings

If the Trump Administration were to carry out large-scale firings of federal employees during or following a shutdown, the impact would extend deep into state economies. Reduced staffing at the Department of Labor, Department of Energy, and General Services Administration would slow approvals, wage enforcement, and contracting for projects across the country. States with large concentrations of federal workers—such as Virginia, Maryland, California, Texas, and New York—could see weakened housing demand and slowed commercial construction as thousands of households lose stable income.

Conclusion

For SMACNA contractors, the risks of the 2025 shutdown and tariff increases are not abstract—they are playing out in state economies every day. Rising costs, labor shortages, and potential project delays tied to federal workforce cuts all threaten stability in local markets. To navigate these challenges, contractors must stay proactive: diversify suppliers, invest in workforce pipelines, and remain engaged in both Washington and state capitals. The added risk of mass federal worker firings by the Trump Administration compounds these pressures, making it essential for SMACNA members to protect margins and keep projects moving at the state level.