In light of the tariffs implemented by President Donald Trump, many companies find themselves urgently revising commercial contracts to mitigate the potential economic impact. This strategic maneuver comes as entities grapple with the 25% increase in the price of goods crossing borders between Canada, Mexico, and the US, as well as the reciprocal tariffs imposed internationally.
Key to managing these economic challenges are the contract clauses of force majeure and change-of-law, which are being scrutinized and potentially revised. The force majeure clause typically excused contract parties from obligations due to unforeseen events. Similarly, the change-of-law provisions allow adaptations in agreements when new laws impact the contract’s terms—a common need given the recent fluctuating tariff measures.
Though several companies have resorted to these legal strategies in hopes of softening the blow, the effectiveness heavily relies on the precise wording and conditions previously established in their contracts.
Since taking office, Trump has extended tariffs on imports from China, broadening the scope to include goods from Canada and Mexico. Despite occasional postponements of certain tariff measures, companies remain focused on preemptive legal strategies to address the uncertainty in the trade landscape. As businesses and legal professionals attempt to navigate these turbulent changes, the spotlight remains on crafting and revisiting contract terms with foresight and precision.
For further insight, you can read more details in the original report by Bloomberg Law.