Global markets and trade policies can shift quickly, and when tariffs are introduced or expanded,
construction projects often feel the impact first. Rising material costs and unpredictable supply
chains can derail carefully planned budgets and schedules. For contractors, developers, and
property owners, the key question becomes: how can you protect yourself from these risks before
breaking ground?
The Growing Tariff Challenge
Tariffs on steel, lumber, aluminum, and other construction materials can cause sudden and
dramatic cost increases. These unexpected expenses may leave one party bearing costs they
never anticipated—or worse, lead to disputes that halt a project entirely. Without clear
contractual provisions, both owners and contractors risk absorbing losses that could have been
avoided with proper planning.
Example: Imagine a commercial office building designed with a façade of imported glass panels
from Europe. If tariffs suddenly increase on imported glass, the cost of those panels could rise by
20–30% mid-project. Without a contract clause to allocate responsibility, the contractor may be
forced to absorb the increase or the project owner may face an unexpected budget overrun that
jeopardizes financing.
Contractual Tools to Manage Tariff Risk
1. Contingency Provisions
Including a contingency allowance in the project budget can provide a financial buffer for
material price spikes tied to tariffs. When these clauses are properly drafted, they help a project
continue without costly delays or disputes.
2. Clear Delivery and Supply Terms
Contracts should set out sourcing, delivery schedules, and storage logistics. By anticipating how
tariffs may disrupt supply chains, both owners and contractors can mitigate risks before they
materialize.
3. No-Damage-for-Delay Clauses
Many contracts include provisions that allow only schedule extensions—not financial
compensation—for delays. The critical issue is whether tariff-related supply delays should be
treated as “excusable” (time only) or “compensable” (entitling monetary relief). Clear drafting
on this point avoids future battles.
4. Change Order and Cost-Sharing Clauses
Tariffs can make material costs fluctuate dramatically. A well-drafted change order process ensures these issues are documented and addressed in real time. Cost-sharing provisions—where the parties agree in advance on how unexpected expenses will be split—can also keep projects moving without disputes over fairness.
Why This Matters
Tariffs and trade disputes are unlikely to disappear. Contractors and owners who build flexibility
into their contracts will be better positioned to absorb market shocks and keep projects on track.
Addressing these issues up front is far less expensive than litigating them later.
How We Can Help
At Marvel Law PC, we work with contractors, developers, and property owners to draft and
negotiate construction contracts that anticipate real-world risks—including tariffs and other cost
disruptions. Our goal is to help you protect your investment, avoid disputes, and keep your
project moving forward.
If you have questions about tariff-related provisions or need assistance reviewing or revising
your construction contracts, we invite you to contact our office. We are here to provide clear,
practical legal guidance.
Marvel Law is here to serve you with purpose. Please contact us at 309-807-2885 for a FREE 15-minute consultation or email us so that we can help.
