Tariff clauses in commercial contracts become the norm: 90% of companies seek risk hedging
An Agiloft survey shows that 92% of companies have included tariff clauses in contracts to hedge against uncertainty; legal departments lead reviews (70%), followed by finance departments (45%). The U.S. collected $165 billion in tariff revenue from January to August, but an appellate court ruled the tariffs illegal, and the government may need to issue refunds.
Deep Insights
A survey released on Tuesday by contract management company Agiloft found that about 90% (92%) of businesses have already included tariff-related clauses in some contracts to address risks from global trade disruptions. This trend reflects that companies are attempting to "hedge against uncertainty" in pricing, procurement, delivery schedules, and compliance requirements. The report noted: "Tariffs are no longer an isolated or short-term phenomenon; their persistence and unpredictability are sufficient to prompt companies to establish routine contractual safeguard mechanisms."
Meanwhile, tariffs imposed by the Trump administration in the U.S. are forcing companies to re-examine contracts with supply chain partners. Another report released in August by law firm Foley & Lardner advised: "When reviewing contracts to assess tariff impacts, one should first examine pricing clauses, as they typically specify what is and is not included in the price."
U.S. law defaults to the importer of record bearing tariff payment obligations, but lawyers at Skadden, Arps, Slate, Meagher & Flom noted in a June report that contract clauses can transfer tariff risk, in whole or in part, to other parties. Agiloft's research also found that nearly half of companies feel overwhelmed by the large volume of contracts requiring review and renegotiation.
The survey showed that among U.S. and U.K. respondents, about 70% said legal departments play a leading role in reviewing contracts or adding tariff clauses, with finance departments ranking second at 45%. The report stated: "This reflects the financial impact of tariffs—from cost modeling, profit protection, to exchange rate risk and tax considerations—which requires diverse input beyond a purely legal perspective."
U.S. Treasury data shows that from January to August, the U.S. government collected a total of $165 billion in tariff revenue. Goldman Sachs estimates that, as of June, U.S. businesses bore 64% of tariff costs, while U.S. consumers absorbed 22%.
However, if recent rulings against tariffs are upheld, the Trump administration may have to refund some funds. A federal appeals court ruled on August 29 that Trump's use of emergency powers to impose broad tariffs was illegal. The government has asked the U.S. Supreme Court to review the case before the ruling takes effect on October 14. According to CBS News, if the ruling stands, the U.S. government may need to return billions of dollars in tariff revenue to companies. Currently, Trump's appeal leaves businesses facing uncertainty, as they "struggle to balance raising prices to cover tariff costs against potentially losing customers."
Agiloft found that tariff changes and political uncertainty are forcing companies to repeatedly revise contract agreements, increasing workloads, stretching legal resources, and sometimes delaying business decisions. The report stated: "Trade and political uncertainty are reshaping how companies manage contracts, forcing teams from legal, finance, to procurement to frequently handle contract amendments, longer approval cycles, and new clauses designed to absorb risk."
Agiloft said its survey covered 600 business professionals, with 500 located in the U.S. and 100 in the U.K., representing various industries, company sizes, and business functions.