Contractors aim to reduce risk of sudden price swings due to tariffs

With the threat of tariffs causing unexpected material price increases, contractors are considering how to protect themselves from their impact.

Drawn from lessons learned during the COVID-19 pandemic, contractors want to add clauses to contracts to mitigate the risk of material price spikes. Many owners accepted material escalation clauses in contracts that allowed for adjustments in pricing during the pandemic.

These contract provisions would allow contractors to seek additional compensation if tariffs cause cost increases for materials. Contractors might also seek fee adjustments if project timelines run long due to delays in receiving foreign-sourced materials.

Contractors could seek tariff cost relief through force majeure clauses that cover unforeseen events that make performance untenable or too costly. Lawyers that serve the industry say that this strategy may not pass muster in court, though.