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This article is based on an insightful conversation with Eduardo Barboza, a 41-year-old general contractor residing in Phoenix, Arizona. Barboza has dedicated 22 years to the construction industry, 10 of which he has spent as a business owner. Recently, he has experienced notable disruptions in his work due to the new tariffs announced by the Trump administration in January. This conversation has been edited for brevity and clarity.

The full effects of these tariffs have yet to unfold, but Barboza is already grappling with significant pricing uncertainty. "Its created a lot of unknowns, which makes it very challenging to do business," he explained. This uncertainty stems from fluctuating costs of materials, which complicates budgeting for projects.

Previously, Barboza's team had a reliable system for estimating project costs based on past records. For example, when a client approached them with a bathroom renovation project, they could confidently quote approximately $5,000. However, that reliability has vanished. "Now, we can't say for sure. The flooring, the tileit could all go up overnight," Barboza lamented.

As the costs for materials rise unpredictably, every aspect of a project demands thorough examination. Turnaround for estimates has increased from a manageable 24 hours to a daunting 72 hours. This situation has compelled Barboza to appoint an additional team member solely focused on pricing, translating to both financial strain and loss of operational efficiency.

The impact on client relations has been significant as well. Barboza recounted a specific instance involving an 84-unit building in Glendale, where they had contracted to replace 15 banks of electric meters. Initially estimated at $225,000, the project ballooned to $278,000. "It was incredibly difficult to go to the client and explain the price increase," he said. Fortunately, the owner didnt cancel the project since it involved essential maintenance; however, other types of projects are now at risk due to rising costs.

Barboza's business has also suffered financial losses, with nearly $500,000 in canceled projects in just one month. He noted a shift in investor behavior where individuals who traditionally renovated homes to flip are now opting to sell properties as they are. This trend has severely impacted his business. In just the past week, two major projects slipped through his fingers. One was a $1.3 million home in Scottsdale where renovation costs soared due to rising pricesflooring increased by $1 per square foot, tile by 36 cents, and cabinets by 10% and then another 10% shortly thereafter. The investor ultimately decided to leave the home as is.

Another project involved a $1.5 million house requiring over $326,000 in renovations, which no longer made financial sense for the investor given the current market trends. Losing those contracts equated to nearly $470,000 disappearing from their pipeline in just one week.

In light of these challenges, Barboza is taking proactive steps to support his team. "It costs a lot of money to build a good team, and Ill do anything I can to keep them," he said resolutely. He has made it a priority to ensure that his employees are paid, even when work is scarce. This week, he invited his team to his home, where they are working on projects he has delayed, such as laying concrete pavers around his pool. This decision incurs an expense of approximately $3,800 for the week, but he views it as an investment in his teams morale and job security.

Barboza reflected on similar tough periods in the past, drawing parallels to the 2008 recession and the initial days of the pandemic. "When times get tough, its a mentality of 'screw the profits,'" he noted. Every decision now revolves around survival and ensuring that his team remains employed. His focus is on generating enough revenue to cover payroll, with thoughts of profits set aside for a more opportune time.

As a leader, Barboza is keenly aware of the need to foster a sense of stability within his team during these tumultuous times. "I can't bring fear to my team," he stated, embodying a commitment to resilience and leadership amid adversity.