With Trump's Tariff Talk, Time to Negotiate for Escalation Clauses in Construction ContractsWith Trump's Tariff Talk, Time to Negotiate for Escalation Clauses in Construction Contracts

Remember 2019? That’s when contractors faced sudden material price surges from tariffs during then-President Donald Trump’s first term in office. How about 2021? That's when contractors saw new price surges and long delivery delays because of Covid-19.

That summer of 2021 was a bummer for homebuilders dealing with lumber prices in the midst of the pandemic. And you needed nerves of steel to buy steel.

With Trump again making tariffs a foreign policy priority, it's a good idea to seek protection in case short-term price spikes return, advises Attorney Kenneth E. Rubinstein. He's urging contractors to negotiate to include material price escalation clauses in new fixed-price construction contracts, which may have helped during the first Trump Administration and the pandemic. 

"I haven't gotten into the deep economic analysis yet," explains Rubinstein, "but if Trump goes forward with a 20% tariff against a country across the board, we could see prices rise" on materials from a particular country and then unpredictable responses from domestic sources of the material.

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