Navigating Tariffs: Is Your Business Prepared?

The tariff landscape is undergoing seismic shifts, bringing significant changes for U.S.-based companies with international suppliers and partners as new regulations take effect.

The key to navigating these changes? Strong, well-structured agreements that establish clear rules on cost allocation, supplier obligations, and regulatory adherence. With the right language and safeguards in place, businesses can effectively manage cost fluctuations, maintain strong and favorable negotiating power with suppliers while assessing the liability for tariff increases, and ensure compliance with evolving regulations.

This blog post explores three critical contract focus areas that can have a substantial impact on financial performance and legal risks due to tariffs:

• Price adjustment mechanisms: ensuring cost increases are fairly allocated

• Force majeure clauses: preventing suppliers from using tariffs as an escape route

• Vendor compliance: protecting against regulatory and financial liabilities

Mitigating tariff impacts: Key focus areas in your contracts

Tariffs can significantly impact costs and contractual obligations. When revising contracts to mitigate tariff-related financial and legal risks, focus on these three key areas:

Price adjustment mechanisms

Suppliers and buyers often disagree over who is responsible for tariff-related costs: most suppliers believe buyers should absorb the full cost increases. In contrast, buyers typically expect the financial burden to be shared. Contracts with well-defined price adjustment mechanisms give buyers greater control over cost increases by establishing clear rules and limits on handling price changes. These clauses specify when price adjustments can be triggered, how increases are calculated and justified, and whether suppliers must provide proof of tariff-induced cost changes.

Why it matters:

Purchasers who fail to control cost allocation through shared risk or cost pass-through mechanisms risk being forced to absorb the full financial impact of tariffs. When vendors' price hikes occur, buyers may not have recourse to challenge them.

How to prepare:

• Identify language that defines price adjustments tariff increases as a trigger for price adjustments

• Spotlight clauses defining how price increases are calculated and set caps to limit increases

• Exercise provisions allowing buyers to renegotiate contracts if tariff-driven cost increases exceed a set threshold

• Require suppliers to provide documentation for price adjustments and to share the financial burden of cost increases

Force majeure

Do changes in tariffs count as force majeure? The answer depends on the specific language in a contract. Some agreements may list “governmental actions” or “regulatory changes” as triggers for force majeure. In that case, tariffs could fit the force majeure definition: unforeseeable circumstances that prevent the fulfillment of a contract. If the agreement only cites “natural disasters” or “acts of God,” then the definition may not apply. Broader language—such as “unforeseen government actions” or “changes in legal regulations”—may be open to interpretation.

Why it matters: 

While traditional force majeure clauses typically cover natural disasters, wars, and government actions, some suppliers may cite them in response to tariffs, arguing that sudden cost increases make performance impossible or commercially impractical. To mitigate this risk, procurement teams should focus on renegotiating force majeure clauses for greater clarity and balance. How to prepare:

• Look for language that specifies "government-imposed tariffs" or "regulatory changes" as triggers for force majeure

• Clarify whether suppliers are required to take alternative steps to meet their obligations, such as sourcing from alternative suppliers

• Review whether force majeure results in a temporary suspension or a full termination of the contract

Vendor compliance

Regulatory compliance responsibilities may vary, but buyers must take an active approach. Embedded contractual protections can help buyers limit their exposure to compliance risks and ensure suppliers adhere to tariff regulations, import/export laws, and product certification requirements.

Why it matters:

Without clear protections, buyers are vulnerable to supplier errors, regulatory shifts, and government enforcement actions. When regulatory violations occur, suppliers may dispute responsibility, leaving buyers to face unexpected costs, fines, and shipment delays.

How to prepare:

• Check for clauses that require suppliers to follow all import/export regulations and tariff requirements

• Require suppliers to provide proof of correct HS code classification and submit all required import/export certifications

• Include provisions allowing for contract termination if suppliers fail to meet regulatory requirements or agreed-upon standards.

• Conduct regular compliance audits of supplier performance to identify potential risks before they escalate

Take control of your agreements with Docusign Navigator

As tariffs are implemented, procurement teams need greater visibility to identify critical elements and terms across their supplier contracts. Docusign Navigator equips procurement teams with the tools to analyze contracts efficiently, surface critical terms, and develop proactive strategies for staying ahead in a fast-changing market. With Navigator, you can:

• 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 strategic responses. Request a demo today to see how Navigator helps procurement and legal teams track tariff-related clauses and manage compliance risk. 

For further insight into contracts and the impact of tariffs, read our post: Are Your Supplier Agreements Tariff-Ready? Here’s What to Review.