The Trump administration’s recent expansion of tariffs has prompted many businesses to question whether significant tariff increases can trigger force majeure provisions in contracts. This issue has become increasingly urgent as companies navigate dramatically increased costs in 2025’s volatile global trade environment.
Force majeure clauses typically excuse contractual obligations when extraordinary, unforeseeable events beyond either party’s control make performance impossible or impracticable. For such claims to succeed, courts generally require that the event was not reasonably foreseeable at the time of contracting and that its effects couldn’t be mitigated through reasonable efforts.
Tariff Increases Usually Don’t Qualify
Historically, courts have rejected tariff increases as force majeure events for several compelling reasons. First, changes in government economic policies are generally considered foreseeable business risks that companies should anticipate when entering contracts. Courts have consistently established that changes in prices or market conditions fall within the realm of foreseeable events.
Additionally, most force majeure clauses explicitly exclude economic difficulties or increased costs. Most standard provisions specifically exclude changes in market conditions, increased expenses or economic hardship as qualifying events.
Furthermore, force majeure traditionally requires that performance be rendered impossible, not merely more expensive. Courts have consistently held that economic burden alone, no matter how severe, is typically not sufficient to excuse contractual performance.
Exceptional Circumstances Where They Might
Despite this general rule, certain circumstances might allow tariff increases to qualify as force majeure events. Modern contracts increasingly include specific language covering government actions, regulatory changes or significant tariff increases within their force majeure clauses, which may provide relief when properly drafted.
The extreme or sudden implementation of tariffs might also receive different treatment. For example, the Trump administration’s February 2025 implementation of a 200% tariff on Canadian aluminum products led several producers to seek force majeure relief, with some courts granting preliminary injunctions that suggest exceptionally sudden and substantial tariff actions might be viewed differently.
When tariff increases accompany comprehensive trade embargoes or export bans, courts may also be more receptive to force majeure arguments. Several technology companies have successfully invoked force majeure when expanded semiconductor export controls to China made delivery of advanced computing chips legally impossible.
Practical Guidance for Businesses
Companies should thoroughly review existing contracts, particularly assessing force majeure provisions in international agreements and language regarding governmental actions. This analysis helps identify high-risk contracts that might warrant proactive renegotiation.
For future contract drafting, businesses should explicitly address whether governmental trade actions constitute force majeure events, define clear thresholds for relief, and specify alternative performance options if tariffs change substantially during the contract term.
When claiming force majeure due to tariff increases, comprehensive documentation is essential. Companies should document all mitigation efforts, financial impacts and evidence demonstrating the unforeseeability of the specific action, while strictly complying with contractual notice requirements.
Evolving Legal Landscape
While courts have generally maintained a conservative approach to force majeure claims based on tariff increases, subtle shifts are emerging in the legal landscape. Some courts have allowed force majeure claims to proceed when manufacturers faced extreme tariff increases alongside new regulatory barriers, noting that the cumulative effect of multiple coordinated government actions might surpass the threshold of ordinary business risk.
Arbitration panels have demonstrated even more flexibility in their interpretations. In March 2025, an ICC arbitration involving automotive parts suppliers found that sudden 35% tariff increases, combined with supply chain disruptions, constituted a force majeure event under the particular contract language at issue.
The proposed International Trade Certainty Act, currently under consideration in Congress, would establish a statutory framework for evaluating force majeure claims related to tariff increases. This legislation would create a rebuttable presumption that increases exceeding 100% within 180 days constitute extraordinary events. While its future remains uncertain, the bill acknowledges the significant disruption caused by volatile trade policies.
Conclusion
Although tariff increases alone typically don’t qualify as force majeure events, the unprecedented scale and rapidity of recent trade policy shifts are challenging traditional legal frameworks. Businesses must adapt their contractual approaches to navigate this uncertain landscape by strengthening force majeure provisions in international contracts, documenting thoroughly when seeking relief, and engaging legal counsel early when facing potential disruptions from tariff increases. As economic nationalism continues to drive trade volatility, proactive legal strategies become essential for businesses engaged in international commerce.