Tariffs Stressing You Out? 3 Steps to Stay Ahead - Florida Webinar

In this webinar presented by Ariela Wagner, Founder, SunRay Construction Solutions, and Alex Barthet, Esq., Principal at The Barthet Firm, we'll break down:

• What tariffs are and who pays for them?  

• The historical impact of tariffs on construction materials

• How to review existing contracts for tariff-related risks

• Best practices for submitting claims and negotiating future contracts

• Pro tips to ensure you don't waive your rights unintentionally

What Are Tariffs, and Who Pays for Them?

A tariff is a tax imposed by a government on goods imported from other countries. These taxes are typically designed to protect domestic industries from foreign competition by making imported goods more expensive.

Tariffs can be set as a fixed percentage of the imported goods' value (ad valorem), a fixed amount per unit (specific), or as a rate that increases after a certain volume of imports is reached (tariff-rate quota).

Who pays for tariffs? Contrary to popular belief, U.S. importers—not foreign companies—bear the cost. These tariffs are typically collected at the port of entry by U.S. Customs.

Who Feels the Impact?

The added costs trickle down through the supply chain, affecting:

• Suppliers & Distributors – Higher costs to import tariffed goods

• Contractors & Subcontractors – Increased material expenses

• Project Owners – Higher bids and change orders

• End Users (Customers/Taxpayers) – Ultimately, the additional costs are passed down

A Quick Timeline of Tariffs in Construction

Pre-2018

• Tariffs existed but were generally low

• Most construction materials flowed freely under trade agreements like NAFTA and WTO rules

2018: Major Shifts Begin

• Section 232 Tariffs – 25% on steel, 10% on aluminum (global)

• Section 301 Tariffs – Applied to Chinese goods, including construction materials

2019–2023: Expansions & Adjustments

• Continued disputes over Canadian softwood lumber (8%-20% tariffs)

2025: Tariffs Reinstated & Expanded

• Now impacting steel, aluminum, copper, and some electrical/mechanical components

While tariffs existed before 2018, they became a major disruptor for construction during the trade wars that began that year.

How to Protect Your Business

Step 1: Review Your Contracts

If tariffs affect your material costs, your first step should be to review contracts you've already executed.

• Material price escalation

• References to tariffs, taxes, or duties

• Changes in law

• Force majeure events (issues outside your control)

Depending on how your contract is written, you may be able to make a claim for any new or changed tariffs that can impact the project’s cost or schedule. Look out for provisions allowing claims for:

• Material price escalation

• References to tariffs, taxes, or duties

• Changes in law

• Force majeure events (issues outside your control)

These provisions may be hidden in various sections, and their wording varies. Some may outright prohibit price escalation or state that you'll absorb all costs—regardless of changes in law. Even if "tariffs" aren't explicitly mentioned, don't assume you have no rights. Similar provisions may be worded differently but still give you leverage.

Example: A contract that was silent on price escalation included a clause allowing claims for cost increases due to changes in law. It was successfully argued that recent tariff changes constituted a qualifying change in law, opening the door to negotiate an equitable adjustment under that provision.

Pro Tip: Don't just search for the word "tariffs." Look for any contract language that may entitle you to relief due to rising costs.

What if your contract is silent on tariffs?

If your contract is silent on tariffs—neither allowing nor prohibiting claims—use that as your opening. The absence of a prohibition can be an opportunity; if it doesn’t expressly forbid tariff-related claims, go ahead and submit one. Even if your contract contains a clause directly prohibiting escalation (such as “no price increases permitted”), you should still consider making a claim. Doing so can help preserve any potential rights you may have, even if those rights are uncertain or currently unenforceable.

Step 2: Provide Prompt Written Notice

Prompt written notice is critical. Many contracts require notice within 48–72 hours, though some allow up to 21 days. Regardless of the timeframe, always submit the notice. Even if you miss the deadline, it's better to give late notice than no notice at all.

If you never submitted anything, the other party could reasonably argue they had no idea there was an issue.

Supporting Your Claim

If you've already experienced a cost or delay due to tariffs, tailor your notice with these specifics:

• Specify the Affected Materials:
  Clearly identify the specific materials impacted by the issue, such as steel, electrical wiring, or other relevant components.

• Estimate Cost and Schedule Impact:
  Provide a detailed projection of the estimated cost and schedule impacts. Explain the methodology used to calculate these impacts, including assumptions and any relevant data sources.

• Reference Contractual Support:
  Where applicable, cite the specific contract clauses that entitle you to make this claim. This may include provisions related to price escalation, force majeure, or changes in law.

• Include Supporting Documentation:
  Supply backup materials that validate your claim, such as price increase notifications from suppliers, and pricing data or market trend charts from recognized trade associations that monitor the relevant commodities.

• Demonstrate Efforts to Mitigate Impact:
  Provide documentation—such as contracts, purchase orders, or written communications—that show your efforts to mitigate cost increases by attempting to lock in pricing early in the project timeline.

Pro Tip: One of the best resources to track tariff changes is TradeComplianceResourceHub.com. Their Trump 2.0 Tariff Tracker provides a daily-updated list of tariffs by country and specific goods.

Also, if you tried to lock in pricing early—include that. Show purchase orders or vendor contracts where you attempted to avoid this issue. This helps prove you didn't ignore the risk.

Step 3: Amend Your Future Contracts

For contracts you haven't yet signed, consider inserting a tariff-related provision like this:

Suggested Clause:

“Notwithstanding anything herein or the Contract Documents to the contrary, [Contractor/Subcontractor] shall not be responsible for delays or costs related to declared U.S. national, state or municipal emergencies, changes in law, duties, or tariffs, and any supply chain issues resulting therefrom (collectively “Emergency”) and [Contractor/Subcontractor] shall be entitled to an equitable adjustment in the contract price and schedule as a result of the foregoing, provided however, that [Contractor/Subcontractor] shall not be entitled to any markup for profit/fee on the portion of the cost increase.”

Many clients are getting similar clauses approved. Some even add language agreeing to give credits back if tariffs subside—this is seen as fair and is usually accepted.

Pro Tip: Consider adding an exception to your monthly/progress releases for outstanding claims, including tariff claims.

Each month, you may be required to sign a release to get paid. Some releases include language that waives all known or unknown claims, which could inadvertently waive your tariff claim.

Add this sentence to your monthly release:

“Notwithstanding anything herein to the contrary, nothing in this waiver or release shall waive or release the undersigned’s rights in and to [tariff related claims based on written notice dated XX-XX-XXX], all of which are reserved.”

Do this every month to preserve your rights.

Final Thoughts

Tariffs are here to stay—and their impact on construction costs is significant. To minimize financial risk and keep your projects on track, consider the following strategies:

• Review existing contracts for escalation or force majeure clauses that may provide relief.

• Submit timely and well-documented claims supported by clear evidence and cost data.

• Negotiate protective clauses in future agreements to address potential price fluctuations.

• Preserve your rights by safeguarding claims when executing monthly lien waivers or releases.

For a free contract review, reach out to SunRay here or visit ContractDetective.com where you can upload agreements and get insights on key provisions. Stay informed, stay protected, and keep building!

Common Questions Contractors May Ask

1. What are tariffs, and how do they affect construction?

Tariffs are taxes on imported goods. In construction, they can increase the cost of materials such as steel, aluminum, and electrical components—leading to higher project costs, budget overruns, and potential delays.

2. Who is responsible for paying tariffs?

The U.S. importer is responsible for paying tariffs, not the foreign manufacturer. These costs are often passed down the supply chain to contractors, project owners, and ultimately the end users.

3. Can I submit a claim for tariff-related cost increases?

Yes—if your contract allows for price adjustments due to changes in law or includes escalation clauses, you can submit a claim. Even if tariffs aren't mentioned explicitly, a well-documented notice might still support your request under force majeure or change-in-law provisions.

4. What should I include in a tariff-related claim?

A valid claim should include:

• A formal written notice with dates

• The specific materials impacted

• Estimated cost increases (with proof)

• References to applicable contract clauses

• Evidence of your attempts to mitigate the impact

5. What if my contract doesn’t mention tariffs at all?

You may still have options. If tariffs were imposed after the contract was signed, you might argue they fall under force majeure or change in law. Consulting a construction attorney is recommended in these cases

6. How soon should I notify the other party about tariff impacts?

Ideally within 48–72 hours, depending on your contract. Some agreements are strict about timing, so act quickly—even a late notice is better than no notice at all.

7. How can I protect myself in future contracts?

Include clear clauses that address:

• Escalations due to tariffs or duties

• Adjustments for national emergencies or supply chain disruptions

• Waiver protections to preserve future claims

8. Can I still claim tariff-related costs after signing a lien waiver or release?

Only if your release includes an exclusion clause. Otherwise, signing an unconditional release could unintentionally waive your rights to pursue tariff-related costs later.

9. Do tariffs ever go down, and should that be included in contracts?

Yes—tariffs can be reduced or lifted. Some owners may request reciprocal language in the contract that shares cost savings if tariffs decrease. Be clear about how both increases and decreases are handled.