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Construction Industry Faces Tariff Volatility in Contracts Amid Trade Uncertainty

WHAT'S THE STORY?

What's Happening?

The U.S. construction industry is grappling with increased uncertainty due to frequent and unpredictable tariff changes. Tariffs on essential materials like steel, aluminum, and copper have disrupted finances, supply chains, and project timelines. Recent trade developments, including a new framework with the EU, have imposed a baseline 15% duty on most EU goods, affecting import-reliant sectors. The industry is considering new tariffs on copper and lumber, which could further impact costs and delays.
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Why It's Important?

Tariff volatility poses significant challenges for construction contracts, affecting material costs and project stability. The unpredictability of tariff changes requires contracts to include provisions that adapt to shifting conditions. The industry must address how risk is allocated and ensure contracts include tariff-specific provisions to manage cost increases. This approach can help mitigate financial exposure and maintain project timelines.

Beyond the Headlines

Legal and contractual strategies are evolving to address tariff-related price increases. Contracts may include price-adjustment clauses, material substitution, and procurement terms to manage expenses. Force majeure clauses and change in law provisions can offer protection against unexpected tariff impacts. These strategies aim to reduce surprises and help keep projects on schedule and within budget.

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