US tariffs: Navigating business contracts amid global trade uncertainty
13 May 2025
Introduction
The global trade landscape is becoming increasingly volatile, with tariffs imposing new pressures on business operations. Rising costs, supply chain disruptions and heightened contractual risks are now part of everyday commercial realities. Yet, with strategic contract management, these risks can be mitigated, ensuring business continuity and resilience.
Why contract review and management are important
Many commercial contracts lack robust mechanisms to respond to sudden tariff shifts, leading to exposure and uncertainty. However, enhanced contract visibility and proactive renegotiation can stabilise operations and protect financial interests.
The following clauses are of particular importance and warrant your careful review:
Cost allocation clauses (e.g., Incoterms): These clauses are pivotal in delineating which party is responsible for import duties, taxes and tariffs. Misalignment can result in significant unplanned financial burdens, making clear articulation of cost responsibilities essential for avoiding disputes over unexpected costs.
Price adjustment clauses: These clauses allow contractual prices to be renegotiated or automatically revised in response to tariffs or other cost changes. Under Belgian law, automatic price revision clauses are subject to strict conditions to be enforceable, ensuring transparency and fairness when linked to indices like customs tariff schedules or commodity price indexes.
Hardship: A hardship clause permits a party to seek renegotiation if unforeseen events severely disturb the contract's equilibrium, making performance excessively onerous. The recent inclusion of hardship in Belgian legislation through Article 5.77 new Civil Code extends this concept further by allowing parties to invoke hardship even without an express clause, provided that the conditions of unforeseeability, external control and excessive burden are met.
Force majeure: Traditionally well-rooted in Belgian law, force majeure is codified in Article 5.226 new Civil Code, excusing non-performance due to unforeseeable and unavoidable events. However, tariffs don’t often qualify, as they're considered to be foreseeable economic factors. Contracts need tailor-made clauses to meet the high standards of impossibility demanded by force majeure.
Termination and renewal: Such clauses offer strategic exits or extensions of contracts in response to dynamic trade conditions. Essential for managing risks, especially in long-term agreements, they prevent automatic renewals under unfavourable terms due to shifting tariff landscapes.
Exclusivity and minimum commitments / SLAs: These clauses should be carefully reviewed to assess exposure and obligations amidst fluctuating trade environments. Restrictions on supplier flexibility and minimum order quantities can significantly increase risk, calling for strategic adjustments to maintain commercial viability in tariff-heavy scenarios.
No-regret moves: proactive contract management
- Map contracts: Leverage contract lifecycle management (CLM) tools to identify agreements exposed to U.S. trade risks. Enhanced visibility allows for swift assessment of cost exposure and risk.
- Assess and act: Proactively apply contractual mechanisms to rebalance risks or anticipate counterparty actions.
- Update templates: Future-proof your contracts with enhanced risk-sharing clauses and resilient safeguards that reflect current trade dynamics. Revising contract templates to include clear mechanisms for tariff adjustments ensures resilience and clarity. And, last but not least,: provide (legal) training to the business to ensure they are aware and use all available contractual mechanisms.
Conclusion
While tariffs are a policy decision, resilience is a business strategy. Understanding and strategically managing your contractual rights can safeguard your business from market volatility. Clear, well-structured agreements are essential for absorbing shocks, maintaining cooperation and securing operational stability in an unpredictable global economy.
Our expert lawyers, Bart Vanstaen and Blanche Devos, are prepared to guide you through these complexities, ensuring your contracts remain robust, adaptable and primed for change.
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