Can New Tariff be a Force Majeure Event?

In the weeks following COVID-related closures, we worked with a company whose business was arranging live entertainment events. We have read every iteration on force majeure contracts known to men, and learned more about the intricacies of force majeure application than we ever cared to know. We remember thinking that this was a once-in-a-lifetime event and that we would never be asked to interpret another force majeure clause ever again. WRONG.

In the world of business contracts, a force majeure clause is like an emergency exit - it’s there for when the unexpected hits hard. Lately, with the Trump Administration’s Executive Order on tariffs causing serious disruptions, some companies are reaching for that exit door. But can a change in tariffs really qualify as a force majeure event?

Do You Have a Force Majeure Clause in the Contract?

First things first. Check if you have a Force Majeure Clause in your contracts. Under English law, there’s no automatic right to claim force majeure. You must have an express provision in your contract. If it’s not in writing, you're out of luck. Always check if your contract includes such a clause - and what exactly it covers.

It's unlikely that you have your exact scenario in your Force Majeure Clause, even if you have one. For example, your contract may excuse non-performance in case of "government actions" but not tariffs explicitly. That meant you will have to make a strong case that the tariff is a form of government action—and not just an economic change.

Is the Tariff Covered by the Clause?

Force majeure clauses often list specific events—war, natural disasters, pandemics. If "government regulation" or "economic restrictions" are included, you might be in luck. But courts can be strict about interpretation.

In many cases, the key argument would be whether the Executive Order imposing tariffs qualified as a direct interference, or if it was merely a foreseeable business risk. And that's tricky - these tariffs weren’t exactly a surprise.

Is Performance Now Impossible or Just Unprofitable?

Here’s where things get real. Force majeure doesn’t cover every hardship. If performance is just more expensive, that's usually not enough. You must show that it's impossible or illegal to perform your duties as outlined.

Have You Followed the Right Procedure?

Force majeure clauses often require formal written notice. Miss a step, and you might lose the right to use the clause at all. Work to quickly issue the required notice, outlining how the tariff may be disrupting performance and triggering the clause under the contract’s specific terms. Timing is everything.

What Happens Next? Termination? Suspension?

Invoking force majeure can lead to different outcomes: suspending obligations, terminating the contract, or entering renegotiations.

Take a look at your particular situation and work to open up discussions with suppliers and downstream buyers. While invoking Force Majeure may not lead to a cancellation, it can buy time to restructure terms and avoid breach of contract.

Don’t Forget the Duty to Mitigate

Even if force majeure applies, businesses must show they’ve tried to lessen the impact. That might include sourcing alternative suppliers, negotiating temporary pricing changes, or adjusting delivery timelines.

What Businesses Should Do Now

Review all contracts now—especially with U.S. partners—and flag any force majeure or material adverse change clauses.
Assess tariff exposure under Trump’s Executive Orders and identify contracts at risk.
Prepare documentation that shows how tariffs impact your ability to perform.
Work with your legal counsel to comply with notice requirements and evaluate next steps.

As international trade policies continue to reshape how we work, companies must stay alert. A single regulatory change can create a ripple effect across your entire operation. With the right legal counsel, legal advice, and practical legal planning, you can stay one step ahead.