Tariff Troubles 2 - Administrative Boogaloo
The U.S. tariff landscape seems to change every day. On April 2, 2025, President Trump announced a 10% baseline tariff on foreign imports, with higher tariffs on nations that run trade surpluses with the United States. That same day, the U.S. Senate passed a bill to end the national emergency that President Trump is using to carry out his tariffs. While it’s unlikely to pass the House, bipartisan resistance to tariffs is building—especially with midterms on the horizon.
Since President Trump took office, his administration has made a flurry of announcements on tariffs, and U.S. trade partners continue to roll out retaliatory measures. In my previous blog post on tariffs, I outlined strategies to protect construction industry players from the financial fallout. Bottom lines will likely be affected—but with the right contract terms, it doesn’t have to be yours.
Today, I want to focus on another challenge: navigating contract administration in an unpredictable tariff environment. If you’re in the construction industry, consider whether your contracts are equipped to handle these increasingly common scenarios:
Changes and Reversals in Law: Many EPC and other construction contracts include change-in-law clauses allowing contractors to request change orders when costs increase due to changes in law, which may be defined to include tariffs. But what happens when a tariff is suddenly repealed? Does the contractor get a windfall? Can the change order be revoked? It might seem reasonable to wait until actual costs hit before submitting a change order—but that’s not always recommended or even possible. If a contract requires notice within seven days of discovering the change, the contractor may have to submit their change request before feeling any financial impact.
Whose Law is it Anyways?: Change-in-law clauses often do not specify whether a foreign country’s laws—like a retaliatory tariff—entitle a contractor to a change in their contract. Should they? If not addressed up front, contractors and owners may find themselves in a costly dispute over who has to bear the tariff pain.
Supply Chain Delays and Force Majeure: Tariff-related trade disputes may result in sudden supply chain disruption. If materials become unavailable or delayed due to retaliatory tariffs or import restrictions, will your force majeure clause apply? Many force majeure clauses exclude events that were “foreseeable” or “reasonably foreseeable” at the time of contracting — so should trade disruption or an updated tariff policy, announced after months of political debate, qualify as “unforeseeable?”
Customs Compliance: Rapidly shifting tariff policies can create significant administrative burdens in customs compliance. If you are importing your own materials, you may be navigating ever-changing webs of regulations, classifications, and potential exemptions. If your project requires imported materials, who bears the responsibility for ensuring compliance with the latest tariff requirements? Will delays due to customs disputes be compensable? Who assumes the risk of noncompliance?
The current tariff landscape is unpredictable, but your contracts don’t have to be. If you need help proactively addressing these issues on your projects, please reach out.
