Sarah W. Langlois, HCDE Legal Counsel

4.24.2025

 

Across the world, buyers and sellers are analyzing how the recently imposed tariffs will affect them. CP members and vendors are not immune from the effects of tariffs. 

 

As of the date of this publication, the following tariffs are in effect:

·         10% base global tariff on countries originally subject to the reciprocal tariffs (except China)

·         145% tariff on China

·         25% tariff on steel and aluminum

·         25% tariff on automobiles and auto parts

·         Tariffs imposed on Mexico and Canada are subject to the existing United States-Mexico-Canada Agreement (USMCA), except fentanyl-based tariffs

o   0% tariff on goods exempted under USMCA

o   10% tariff on non-USMCA compliant energy and potash

o   25% tariff on non-USMCA compliant goods

 

From a legal perspective, as a general rule, sellers bear the risk of increased costs, including those caused by tariffs, for fixed-price contracts, whereas under cost-plus contracts, increased costs are typically passed on to buyers (unless a guaranteed maximum price has been agreed upon).  Sellers may attempt to rely on force majeure provisions in contracts to argue that the imposition of tariffs has made performance impossible or impracticable, thereby excusing the sellers’ performance under existing contracts.  Courts, however, have virtually universally rejected arguments by sellers that tariff or tax-related price increases justify nonperformance because of force majeure or commercial impracticability, finding that cost fluctuations, including those caused by tariffs, are foreseeable risks that sellers should take into account. 

 

From a practical perspective, buyers and sellers should communicate in good faith regarding increased costs due to tariffs.  Across-the-board increases – for example, sellers sending unilateral notices to buyers that all goods will be increased by 10% due to tariffs – should be viewed with skepticism and/or outright rejected.  Sellers should provide sufficient documentation that goods desired to be purchased by buyers are subject to specific tariffs, and buyers and sellers should negotiate any changes to pricing in good faith, ideally with both sides sharing the increased costs.       

 

Choice Partners is carefully evaluating the executive orders imposing, revising, and pausing the various tariffs and will soon be communicating CP’s plan to address vendors’ requests for pricing adjustments stemming from the imposition of tariffs.