Why do Force Majeure Provisions Matter in Tariffs

Tariffs have a special talent: they show up uninvited, eat your margin, and then act like
they’ve always lived in your house. One morning your landed cost is predictable; by lunch,
your spreadsheet looks like it got into a bar fight. If you buy, sell, or move goods across
borders, tariffs aren’t just “trade policy”they’re a contract problem.

That’s where force majeure provisions come in. Not because they’re magical “get out
of contract free” cards (they are not), but because they help you answer the big questions that
tariffs love to ask at the worst possible time: Who pays? Who can delay? Who can walk away?
And how do we keep this relationship from turning into a lawsuit with shipping containers as exhibits?

Tariffs 101: The Cost That Can Change Overnight

A tariff is a government-imposed duty on imported goods. In practice, it’s a surprise “cover charge”
added to the cost of doing business across borders. Tariffs can be targeted (certain products,
countries, or industries) and they can change quickly through proclamations, agency actions,
or new enforcement approaches.

From a contract perspective, tariffs matter because they don’t just increase costthey can scramble
delivery timelines, reroute supply chains, and even make performance economically irrational (or
operationally impossible) under the deal you signed months or years earlier.

Force Majeure: Not a Vibe, a Clause

“Force majeure” is contract-speak for: “If something extraordinary happens outside our control,
and it directly prevents performance, we agree on what happens next.” The key words are
extraordinary, outside control, and directly prevents. Courts often treat force majeure
clauses narrowly, meaning the exact language matters more than your feelings about the situation.

Why tariffs are a tricky fit

Tariffs are government action, which sounds force-majeure-ish. But many force majeure clauses were
drafted with hurricanes and wars in mindnot customs duties and harmonized tariff codes.
A tariff hike might not stop you from delivering goods; it might “only” make the deal unprofitable.
And “this is expensive now” is not always a winning legal argument unless your contract makes it one.

The Real Reason Force Majeure Provisions Matter in Tariffs

When tariffs spike, the legal fight usually isn’t about what a tariff is. It’s about what your contract
says to do when the tariff hits. A well-drafted force majeure provision (or a set of related clauses)
can turn panic into a process.

1) They allocate risk before emotions arrive

Tariff disputes get spicy because each side believes the other should “obviously” pay. Buyers may say,
“Your sourcing choice isn’t my problem.” Sellers may respond, “This wasn’t in the price, and my CFO
is now practicing yoga breathing at their desk.” A force majeure clause can clarify whether changes in
law, government actions, or trade restrictions shift obligations, excuse delay, or trigger renegotiation.

2) They define what relief looks like (and what it doesn’t)

Relief can mean many things: schedule extensions, temporary suspension, partial shipments, substitute
goods, allocation among customers, or termination rights after a defined period. Without clear language,
parties fight about whether “relief” means “I can’t do it” or “I can do it but I refuse to lose money doing it.”

3) They reduce the “gotcha” factor in notice and documentation

Many clauses require prompt notice, proof of impact, and ongoing updates. In tariff scenarios, timing is
everything: duty changes may apply based on entry dates, classification, or specific product/country rules.
A strong clause nudges both sides into early communicationbefore someone “discovers” the issue in an
invoice and assumes bad faith.

4) They protect relationships (because lawsuits are the opposite of a supply chain)

Supply relationships often matter more than winning a single dispute. Force majeure provisions can create
a structured renegotiation window or temporary accommodation so you can keep goods moving while sorting
out economics. A clause that says “here’s the playbook” is cheaper than a clause that says “see you in court.”

Force Majeure vs. “Change in Law”: The Tag Team You Actually Want

For tariffs, the MVP is often a change in law (or “government action”) clause, not force majeure alone.
Why? Because tariffs are, by definition, a legal/regulatory change. A change-in-law clause can be drafted to
address cost impacts directlysomething force majeure clauses sometimes avoid.

What a tariff-friendly clause set usually covers

• Trigger events: new or increased tariffs, quotas, sanctions, customs rules, export controls, or other government actions.
• Causation: the event must materially affect cost, timing, or ability to performnot just be annoying.
• Relief menu: price adjustment, surcharge, cost-sharing, delivery extension, substitution, or termination after X days.
• Documentation: duty statements, broker notices, classification rulings, and evidence of mitigation.
• Process: notice deadlines, negotiation window, escalation steps, and interim performance rules.

The Common Tariff Mistakes That Make Force Majeure Useless

Mistake #1: “Acts of God” language only

If your clause lists floods and earthquakes but not government actions, trade restrictions, or changes in law,
you may struggle to fit a tariff increase into it. Tariffs are not weather. (Although they can create storms
in accounting departments.)

Mistake #2: No mention of cost increases

Many clauses excuse performance only when it becomes impossible, not merely more expensive. If the tariff
doesn’t prevent deliveryjust destroys profitabilitythe clause may not help unless it explicitly treats
certain cost shocks as qualifying events or routes them to a pricing mechanism.

Mistake #3: No pricing or duty allocation clause

International deals often need a plain-English rule: “Prices include/exclude duties” and “who pays tariffs.”
If you rely on assumptions (“the seller pays import duties, right?”), you’re one policy change away from a
surprise argument. This is where well-chosen delivery terms and a clear landed-cost definition matter.

Mistake #4: Notice requirements that are impossible in real life

A clause that requires notice within five days of “knowledge of any event” sounds tough and responsible
until your tariff exposure depends on classification, origin rules, exclusions, and entry dates that take weeks
to confirm. Make notice realistic: quick heads-up, followed by details when you have them.

Tariffs in the Real World: Why “Foreseeability” Keeps Showing Up

A recurring theme in force majeure fights is whether the event was “foreseeable” and whether the parties
allocated the risk. In modern trade, tariff volatility is no longer exotic. The more routine the risk appears,
the more a court may expect the contract to address it explicitly.

That doesn’t mean you’re doomed. It means you should draft like a realist: tariffs can rise; governments can
act; and your contract should say what happens when they do.

“Commercial Impracticability” and the UCC: The Backup Plan (Not Plan A)

In U.S. sales-of-goods contracts, parties sometimes look to the doctrine of commercial impracticability,
including under the Uniform Commercial Code (UCC). The UCC recognizes that performance may be excused if
an unforeseen contingency makes performance impracticable, and it also addresses compliance with government
regulations or orders and the need for notice and fair allocation when supply is limited.

Here’s the catch: relying on default legal doctrines is like relying on airport Wi-Fi for your quarterly close.
It might work, but it’s stressful, inconsistent, and you’ll wish you’d planned ahead. A tailored force majeure
and change-in-law framework usually beats arguing about whether a cost spike was “impracticable enough.”

When UCC concepts still matter

• Allocation: If you can only perform partially, rules about fair and reasonable allocation can become relevant.
• Notice: Timing and content of notice can be decisive in disputes.
• Government action: Compliance obligations can strengthen an excuse argument if performance is constrained by law.

A Practical Tariff-Ready Drafting Blueprint

Step 1: Say the quiet part out loud

If tariffs matter to your economics (they do), write them into the contract. Use plain language like:
“Tariffs, customs duties, trade restrictions, and changes in law” as covered events. Avoid vague references
to “events beyond control” and hope.

Step 2: Separate “can’t perform” from “can perform but at a huge loss”

Create two tracks:
(1) Performance-preventing events (port closures, bans, embargoes) that excuse delay or nonperformance; and
(2) Cost-impact events (tariffs, duty reclassification, new fees) that trigger pricing adjustments or renegotiation.
This prevents forced, awkward arguments like “I’m technically able to ship, but I’m emotionally unable to accept these margins.”

Step 3: Build a pricing mechanism that doesn’t require a courtroom

Consider options such as:

• Tariff pass-through: seller can add verified incremental duties to price.
• Shared pain: parties split incremental tariff costs above a threshold.
• Caps and collars: adjustments only after a specified percentage change.
• Renegotiation window: good-faith negotiation for X days, then termination right if unresolved.
• Index-based pricing: less common for tariffs, but useful when combined with landed-cost formulas.

Step 4: Define “mitigation” like grown-ups

Many clauses require the affected party to mitigate. Great! But define what mitigation means:
alternate sourcing, routing changes, applying for exclusions, duty drawback, classification review,
or adjusting product specs where legal and commercially reasonable.

Step 5: Make documentation and timing realistic

Tariff events often need broker input, classification work, origin analysis, and sometimes agency guidance.
Use a two-stage notice approach: (1) rapid notice of potential impact; (2) detailed support within a
reasonable period.

Specific Examples: How Tariffs Trigger Contract Drama

Example A: Steel/aluminum tariffs and long-term supply deals

When major tariffs hit metals, contracts for components, machinery, and construction inputs can see sudden
cost increases. If your deal is fixed-price with thin margins, a tariff shock can turn “profitable” into
“why is my controller staring into the void.” Clauses that mention government action, changes in law, and
cost pass-through give both sides a defined way to adjust without accusing each other of bad faith.

Example B: Section 301-style duties and product list surprises

Broad tariff programs often operate through detailed product lists tied to Harmonized Tariff Schedule
classifications. Two products that look identical on a pallet can carry different duty exposure because of
classification details. Contracts that require cooperation on classification and origin documentationand
provide a process for tariff-driven renegotiationare less likely to devolve into “you misclassified this”
finger-pointing.

Operational Tips: What to Do When a Tariff Change Hits Mid-Contract

1. Pull the contract: Find force majeure, change in law, pricing, tax/duty allocation, and termination provisions.
2. Get the tariff facts: confirm classification, origin rules, entry date, and any applicable exclusions.
3. Send early notice: even if the impact is still being quantified. Preserve your timeline obligations.
4. Document mitigation: alternate suppliers, rerouting, exclusion requests, and cost-reduction steps.
5. Propose a solution: surcharge, shared cost, revised delivery schedule, or temporary allocation plan.
6. Keep shipping if you can: interim performance rules reduce disruption while negotiations happen.

Conclusion: Force Majeure Matters Because Tariffs Don’t Care About Your Spreadsheet

Tariffs are government action with very real commercial consequencesand they can change fast.
Force majeure provisions matter in tariffs because they translate chaos into contract language:
triggers, timelines, proof, and remedies. Better yet, when paired with a strong change-in-law and pricing
framework, they help parties share information, adjust fairly, and keep goods moving.

The goal isn’t to “win” a force majeure argument. The goal is to avoid needing one.
Draft like tariffs are inevitable, because history suggests they’re at least highly motivated to return.

Experiences From the Tariff Trenches (The “I Wish We’d Drafted This” Edition)

Let’s talk about the part no one puts in the contract: the human experience of a tariff surprise.
Not “human” as in “tearful monologue in the rain,” but “human” as in “three departments trying to
solve one problem using five different definitions of the word ‘cost.’” Below are common, very real
patterns companies run into when tariffs collide with force majeure and trade contracts.

Experience 1: The email that starts with “FYI” and ends with “URGENT”

It usually begins with an innocent message from logistics or a customs broker: “FYI, duty rates changed,”
or “CBP is asking about classification.” The first reaction is often mild curiosity. The second reaction is
the CFO doing mental math fast enough to qualify as cardio.

The companies that handle this well tend to have a contract clause that acts like a circuit breaker:
notify, quantify, propose an adjustment, continue performance where possible. The companies that handle it
poorly tend to have… vibes. And vibes are not enforceable.

Experience 2: Sales says “We can’t raise prices,” procurement says “We can’t absorb it”

Internally, tariff shocks are a tug-of-war. Sales wants to protect customer relationships. Procurement
wants to protect margins. Operations wants the factory to keep running. Legal wants everyone to stop using
the phrase “force majeure” like it’s a magic spell.

A tariff-ready clause reduces internal conflict because it makes the decision less personal.
If the contract says tariffs trigger a surcharge above a threshold, your team debates the facts
(what’s the incremental duty?), not the philosophy (“should we eat this?”).

Experience 3: The “we’ll just reclassify it” temptation

In a tariff squeeze, someone always suggests a shortcut: “Can we classify it differently?”
Sometimes that’s legitimateclassification can be nuanced, and product descriptions can be improved.
But the wrong move here is a compliance headache you do not want. Strong contracts encourage cooperation
and documentation: shared responsibility for accurate classification and origin info, plus a clear process
for how tariff impacts are handled once the compliance dust settles.

Experience 4: The scramble for alternatives is real (and expensive)

“Mitigation” sounds tidy on paperuntil you’re actually doing it. Alternate suppliers may require new
quality approvals. New routes may add weeks. Substitutions may trigger regulatory testing or customer specs.
Companies that planned for this in the contract can negotiate temporary adjustments while mitigation is
underway. Companies that didn’t often end up choosing between shipping late, shipping at a loss, or
litigating while the customer goes elsewhere.

Experience 5: The best tariff clauses don’t just shift costthey manage behavior

The most effective provisions do three behavioral things:
(1) force quick communication,
(2) require credible proof,
and (3) keep the parties working on solutions instead of blame.
A clause that says “affected party must promptly notify and provide reasonable documentation” prevents
surprise invoices. A clause that says “both parties will negotiate in good faith for X days” creates a
runway to solve the problem. A clause that allows termination after a defined period avoids endless limbo.

Experience 6: Everyone forgets the downstream contracts (until it’s too late)

One of the most painful moments is realizing your upstream contract lets you pass through tariffs,
but your downstream customer contract is fixed-price with no adjustment mechanism. That’s how a tariff
becomes a margin vacuum: it sucks value from the middle of the chain.

The companies that sleep best at night align clauses across the chainsupplier contracts, customer contracts,
and logistics agreementsso tariff risk doesn’t concentrate in one unlucky place.

Experience 7: “Force majeure” is often the wrong labelbut the right conversation starter

In practice, teams reach for “force majeure” because it’s familiar. But tariffs often fit better under
“change in law” or “tax/duty adjustment” language. Still, the moment someone says “force majeure,” it’s a
signal: the economics broke. The smartest move is to pivot from labels to the contract’s actual mechanisms:
pricing, notice, mitigation, allocation, and renegotiation rights.

The punchline is that tariffs don’t just test your supply chain; they test your drafting discipline.
If your contract anticipates tariff volatility, you negotiate solutions. If it doesn’t, you negotiate
accusations. And accusations are a terrible substitute for clauses.