Are Your Supplier Agreements Tariff-Ready? Here’s What to Review

A fast-changing tariff landscape is pushing procurement and legal teams across industries to reassess everything from sourcing decisions to pricing structures. With price fluctuations looming, even the most carefully crafted budgets and sourcing plans could face disruption.

Whether you're renegotiating existing contracts, reviewing new ones, or concerned about those that will be in place for a while, it's essential to ensure that key clauses are crafted to protect your interests. Understanding and addressing critical terms like price adjustments, payment flexibility, and termination clauses can offer you the flexibility to adapt to unexpected cost changes.  In this guide, we highlight key clauses to review for managing tariff-driven price fluctuations and offer insights on protecting your operations and avoiding unexpected costs. Read on to learn how to:

• Prevent unexpected price hikes: Define cost pass-throughs and price caps to secure price adjustments

• Retain flexibility: Use termination, renegotiation, and review clauses to adapt to tariff-driven cost changes

• Avoid disruptions: Establish clear escalation clauses to resolve disputes efficiently and prevent delays and disruptions

Mitigating tariff impacts: Key clauses to review

Contract reviews and renegotiations, as well as any significant shift in the supply landscape, are critical times to review key terms such as price, volume, delivery timelines, or payment terms.

Here are some key clauses to identify and analyze for the proper protections:

• Price adjustment clauses

• Fine clauses

• Duration, renewal terms, and termination for convenience clauses

• Country of origin details

• Payment terms

• Volume commitments

• Escalation or dispute resolution clauses

Price adjustment clauses

Price adjustment clauses offer mutual benefits: suppliers get protection from bearing the full burden of tariffs, while buyers gain a structured and transparent process for handling cost adjustments. With tariffs, cost pass-through mechanisms are especially critical, as they define how cost changes will be calculated, justified, and applied.

Why it matters: 

Without a clear cost pass-through mechanism, suppliers may justify price hikes or inflated charges under the guise of “tariff-related costs,” leaving purchasers vulnerable to surprise price hikes, supplier disputes, and operational delays.

What to look for:

• Confirm that elements such as "tariffs," "raw material price hikes," or "regulatory changes" are explicitly listed as triggers

• Check that the contract defines a clear formula or method for how the cost increases will be calculated

• Confirm the notice and timing rules for cost increases and check if the other party is required to provide supporting evidence for price increases

• Ensure there’s a cap on the percentage or dollar amount of price adjustments allowed

Fine clauses

While fine clauses (often called penalty clauses) offer buyers protection, they can become a burden in volatile markets where delays are common. Enforcement of delay clauses is time-consuming and adds administrative complexity, requiring procurement teams to track violations, resolve disputes, and manage supplier pushback.

Why it matters

Beyond straining relationships, strict fine clauses could encourage suppliers to cite force majeure to avoid mounting costs. By explicitly outlining which events are considered excusable delays, buyers can avoid unnecessary disputes and foster better supplier relationships.

What to look for:

• Specify triggers for late delivery or non-performance fines, especially if tariff-related delays are included

• Ensure contracts allow leniency or exemptions for delays caused by external factors like tariffs or regulatory changes

• Include language requiring suppliers to mitigate delays before fines are enforced

• Cap fine amounts or percentages to avoid excessive financial liability

• Confirm that tariffs are not classified as a force majeure event to prevent suppliers from invoking it to avoid fines

Duration, renewal terms, and termination for convenience clauses

When tariffs increase the cost of imported goods and materials, it may become cheaper to source products from alternate suppliers. Opting for contracts with periodic price reviews, renegotiation triggers, and termination for convenience clauses can help buyers mitigate tariff-related cost increases and enable timelier responses to market trends with few or no penalties.

Why it matters:

Without options for early contract termination, renegotiation, or mid-term reviews, buyers may get locked into contracts that restrict them from seeking alternate suppliers, negotiating more favorable terms, or shifting production strategies. Additionally, some suppliers may require exclusivity in exchange for lower prices, further limiting flexibility and making it difficult to source from alternate suppliers. 

What to look for:

• Language that allows for reviews at set intervals or when tariffs or other triggers occur

• Clauses that define tariffs, regulatory changes, or increased production costs as valid reasons to cite termination clauses

• Clear specifications on how much notice is required before termination can take effect and post-termination obligations (e.g., return of deposits, handling of in-progress orders, etc.)

• Clear definitions of what constitutes "economic unviability”

Country of origin details

Clear origin details help with tariff classification for customs clearance, allow buyers to estimate cost impacts based on sourcing countries, and ensure compliance with import/export regulations.

Why it matters: 

Failure to account for origin details increases the risk of regulatory violations—especially when importing from regions with trade restrictions. This oversight can result in fines, penalties, and supply chain disruptions. Without accurate country-of-origin information, shipments may be held at customs, leading to production slowdowns and increased storage fees or demurrage charges for buyers.

What to look for:

• Require suppliers to provide certificates of origin (COO) and to notify buyers of production location changes

• Ensure suppliers comply with import/export laws and support customs clearance by providing required documentation or correcting errors to avoid delays

• Define who is responsible for tariff-related costs and confirm that suppliers cannot classify tariff-driven delays as force majeure

Payment terms

Payment terms that allow for renegotiation or deferral give buyers the flexibility to work with suppliers to manage higher-than-expected invoices resulting from tariffs. Moreover, payment terms that better align with cash flow give businesses greater control over their budgets.

Why it matters:

Without the ability to defer or stagger payments, companies may experience liquidity shortfalls, making it harder to cover operational expenses and forcing costly short-term financing. Furthermore, strict payment terms and late payment penalties, interest, or fees can further increase procurement costs. 

What to look for:

• Ensure the right to defer payments or renegotiate schedules when tariffs or price increases affect cash flow

• Check for late fee limits and leniency clauses for delays caused by external factors like tariffs

• Confirm payment timelines (e.g., Net-30, Net-60) and ensure flexibility during renewals or renegotiations.

• Require suppliers to continue delivering goods during payment disputes or delays

Volume commitments

When tariffs are set as renegotiation triggers in volume commitment clauses, procurement teams gain flexibility to manage costs and adjust sourcing strategies. A well-structured clause allows buyers to reduce order quantities, renegotiate terms, or shift to alternative suppliers if tariff-driven costs become too high.

Why it matters:

Strict volume commitments may force buyers to purchase a minimum quantity of goods, even when tariffs increase costs. Without the flexibility to renegotiate or reduce commitments, procurement teams may end up paying more than they want or budgeted for or face penalties if they’re forced to exit a contract early to manage costs or seek alternative suppliers. 

What to look for:

• Triggers that allow renegotiation of volume commitments if tariffs increase beyond a certain threshold

• Flexibility to reduce volume commitments or exit the contract without penalty if tariffs make current terms too costly

• A purchase cap that limits buyer exposure to rising costs due to tariff-driven price increases

• Clauses that provide a review period before a volume commitment is locked in, allowing for adjustments based on external market conditions

Escalation or dispute resolution clauses

Disputes over tariff payments can escalate into legal action or arbitration, increasing administrative costs and straining relationships. A clear dispute resolution process helps avoid costly litigation by encouraging mediation or negotiation as a first step and allows parties to reach a compromise more quickly.

Why it matters:

Without a well-defined escalation clause, suppliers could unilaterally increase prices when new tariffs are imposed, leaving buyers with no clear recourse to dispute the charges. Should the supplier withhold deliveries during disputes, businesses could face further delays and disruptions. 

What to look for:

• Outline a formal process for handling tariff-related disputes and establish clear responsibilities and timelines

• Include language that allows buyers to escalate cost disputes caused by tariff increases

• Identify which party or parties will shoulder the costs for dispute resolution processes

• Define who has the authority to escalate disputes and initiate formal resolution proceedings

Intelligent agreement management is a strategic advantage

Identifying key contract terms is just the first step—acting on them at scale is what makes the crucial difference. As tariffs are imposed, procurement teams need greater visibility into agreements to quickly identify and act on critical elements and terms within their supplier contracts.

Docusign Navigator empowers procurement and legal teams with the tools they need to act quickly in the face of changing market conditions to reduce risk. Navigator helps your teams:

• Stay ahead of price increases: Identify price adjustment clauses and price cap terms early to stay proactive and determine the right actions to take with your suppliers

• Renegotiate proactively: Receive automated renewal alerts and track termination clauses to renegotiate or exit contracts impacted by tariff changes

• Manage compliance obligations: Gain clarity into obligations, governing law, and jurisdiction terms to ensure contracts align with evolving regulations

Docusign Navigator is part of Docusign IAM, an AI-powered platform designed to help teams extract the most value from their agreements and enable quick strategic responses. Schedule a custom demo today to explore how Docusign IAM and Navigator can support your procurement and legal teams.

For deeper insights into contracts and the impact of tariffs, read our post: Navigating Tariff Impacts: Is Your Business Prepared?