My colleague (Graham Quinn) recently wrote an article about the potential financial impact of the impending steel and aluminum tariffs on the construction industry. See hyperlink: The Impact of President Trump’s Steel and Aluminum Tariffs on the Construction Industry | Texas Construction Law Blog. One question that we are receiving is whether the ensuing tariffs on steel and aluminum qualify as a force majeure event. The short answer is it depends on the language of your contract.
For instance, the AIA 201 defines a force majeure event as a labor disputes, fire, unusual delay in deliveries, unavoidable casualties, adverse weather conditions … or other causes beyond the Contractor’s control. The ensuing tariffs would arguably qualify as a cause beyond the Contractor’s control. Other contracts specifically define a force majeure event as “restrictive governmental laws or regulations,” which again is beneficial language seeking to enforce a force majeure provision.
However, some contacts may not include language that would cover tariffs. In particular, one contract that I recently reviewed defined a force majeure event as an “Acts of God, war, rebellion, strikes or lockouts, epidemics or health crises, landslides, lightning, earthquakes, fires, named tropical storms.” There is clearly nothing in this clause that would cover the ensuing tariffs.
For those in the contract drafting or negotiating phase of an upcoming project, be sure to specifically include the specific term “tariffs” in the defined terms of force majeure events. You should also pay close attention to the remedies afforded by the force majeure provision. Many only permit extensions of time, whereas others allow equitable adjustments to the contract price. Think about key remedies that matter to your company and be sure advocate for them in the contract.
With the tariffs due to take effect on March 12, 2025, now is a good time to take a look at your force majeure provision and make necessary adjustments to your MSAs. Gray Reed is happy to help.