LEGAL PERSPECTIVES Navigating property laws & regulations
Mitigating Risk Related to Tariffs
T
he Trump administration has not shied from its stance on tariffs. Throughout his presidential campaign, Donald Trump championed tariffs as a protectionist policy that boosts domestic manufacturing and provides leverage to negotiate with other countries. Many economists, however, anticipate that tariffs will impose higher costs on consumers, slow economic growth and reduce product quality through lessened competition. JORDAN WEEKS
Regardless of your beliefs on tariffs, members of the construction industry must understand the impact of tariffs and ways to contractually mitigate risk in the face of them.
What is a tariff?
A tariff is a tax imposed by a government on goods imported from other countries. A country may impose a tariff for several reasons, such as: • incentivizing consumers to purchase domestic goods by increasing the cost of international goods, or • seeking to increase domestic manufacturing by penalizing companies who manufacture outside of the country. But like most policies, there are drawbacks to tariffs. In general, tariffs
increase prices on goods made internationally and domestically. This is because domestic producers tend to increase costs when foreign competitors do so. Tariffs also cause delays due to supply chain disruptions. And they increase uncertainty in contract prices, which also cause contractors to build in cushions to account for possible new tariffs and increases on expenses. In the construction industry, tariffs generally increase the cost of materials and operational costs, which, in turn, increase overall construction costs.
The present status of U.S. tariffs
As of the date of this article, the U.S. has imposed a blanket 10% tariff on goods imported from all countries – save goods imported from Canada and
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