Didn’t See That Coming: Protecting Your Business From Tariffs With Well-Drafted Force Majeure Clauses

Business conditions rarely stay static. Contracts signed in stable times may suddenly look very different when circumstances shift — whether because of a global pandemic, supply-chain collapse, or the sudden imposition of tariffs. COVID-19 made that reality painfully clear. Today, shifting trade policy and unpredictable tariff swings are once again testing the limits of standard “boilerplate” provisions, particularly the force majeure clause.

What Force Majeure Really Covers

“Force majeure” — literally, “superior force” — refers to contract language that excuses performance when extraordinary events make fulfillment impossible. These provisions allocate risk when events outside the parties’ control disrupt the deal.

But courts interpret them narrowly. Unless a triggering event is clearly identified, the clause may offer no protection. Force majeure clauses are aimed narrowly at events that neither party could foresee nor guard against in the contract. That lesson was underscored in COVID-era litigation: parties invoking force majeure often lost unless their contracts expressly identified “pandemics,” “public health emergencies,” or “government action” covering lockdowns and closures.

Tariffs and the Need for Precision

Tariffs pose a similar drafting challenge. General references to “unforeseeable events” or “economic conditions” are rarely enough. Courts frequently treat rising costs as a normal business risk rather than a force majeure event.

By contrast, clauses that identify “government action,” “import/export restrictions,” or — most directly — “tariffs, duties, or trade restrictions” stand a far better chance of providing relief. Consider a U.S. company that contracts to buy foreign steel at a fixed price, only to face a sudden 25% tariff. If the contract’s force majeure clause lists tariffs, the buyer may argue that the tariff fundamentally altered the bargain. Without that specificity, however, a court may simply view the higher price as a risk the buyer assumed.

Drafting Considerations

To make force majeure language effective in the context of tariffs and trade disruptions, businesses should:

• Identify tariffs and trade restrictions explicitly.
• Clarify whether cost increases alone trigger relief.
• Spell out remedies, such as suspension of performance, renegotiation, or termination.
• Require prompt notice and reasonable mitigation efforts.

 

These details reduce uncertainty and increase the likelihood that a court will enforce the provision as intended.

Conclusion

Force majeure clauses are no longer afterthoughts buried at the back of contracts. In a climate of shifting trade policy and economic volatility, they deserve careful, tailored drafting. Businesses that take the time to refine these provisions now will be far better positioned when the next disruption — whether tariff, pandemic, or otherwise — arrives.