Contract Clauses to Protect Against the Increase in U.S. Tariffs

Revising and modifying sales contracts for the American market to allow for price adjustments in case of an increase in U.S. tariffs is an impractical solution. The same goes for including price adjustment clauses or express termination clauses in contracts proposed to new American clients.

A solution suggested by many consultants to protect against the increase in tariffs during exportation to the United States is to include specific clauses in sales contracts with American customers or importers. The underlying idea is that if the tariff increase for importing into America goes beyond a certain threshold, then the seller, the Italian exporter, should have the ability to raise the selling price or there should be a provision for contract termination. The idea, therefore, is to review existing sales contracts with American clients or include such clauses in contracts yet to be signed.

The reference, in various respects, is to legal concepts such as force majeure, excessive onerousness, impossibility of performance, and the like. As for the norms of American law that govern commercial relations, similar or equivalent principles may include:

• Hardship Clause - https://en.wikipedia.org/wiki/Hardship_clause
• Impossibility - https://www.law.cornell.edu/wex/impossibility
• Force Majeure - https://www.law.cornell.edu/wex/force_majeure
• Price adjustment clauses, etc.

Without getting into the merits, we observe that these are solutions that are essentially ineffective because we consider it extremely unlikely, if not impossible, that an importer or an American client would agree to review existing contracts or even accept the inclusion of clauses for price adjustment in new supply contracts for the United States. This is even more true when the American client is a large company, as it is almost mandatory in all of these cases to use the contract proposed by the American purchasing party.

These are solutions that have their place, theoretically, in the realm of legal theory and are generally suggested by consultants with little experience in the typical commercial sales practices of the American market.

However, there are technical solutions that can reduce the impact of tariffs during importation into the United States, and we invite you to contact ExportUSA to analyze your specific case in detail.

WARNING

The information contained in this article does not constitute legal advice or professional consultation in any way, but solely general information for informational purposes.