Mitigating supply chain risks: legal and commercial strategies in a post–tariff era with a focus on Belgian contract law

Since the US government announced new import tariffs for goods entering the United States, there has been a fundamental shift in international trade. EU imports now face a rate of 20 percent and the US government has instituted a minimum rate of 10 percent for all trading partners (with some exceptions such as Canada and Mexico under the USMCA Agreement). These measures add to existing customs duties, such as the 25 percent levy on cars, steel, and aluminum. These new import tariffs may have a significant effect on the cost structures and supply chains of businesses. Companies importing goods into the United States, or relying on supply chains where pricing depends on these tariffs, must contend with higher costs and the possibility of interruptions in production or delivery. A key question is then who in the supply chain ultimately pays for these duties, but contractual language may allocate these costs elsewhere, often passing them on to the supplier or the buyer. Businesses should therefore examine their existing contracts to determine how extra or unforeseen government levies, taxes, or import duties are allocated among the parties.

Reviewing your existing commercial contracts

To avoid the unwelcome surprise of absorbing substantially higher import costs in your supply chain, it is critical to verify which terms regarding price adjustments, changes in law, unforeseen circumstances, etc. your contract contains. These provisions can determine whether – and in what manner – additional duties can be passed on, and they may allow for suspension, renegotiation or even termination if the tariffs make performance unreasonably burdensome. Whether existing contracts still allow one party to require performance from the other will mainly depend on the existence (and precise text) of the following clauses in your agreements:

Responsibility for paying the tariffs

As a general principle, the legal obligation to pay import tariffs rests with the importer of record. If the parties have expressly agreed on shipped “Delivered Duty Paid” (DDP) or a similar arrangement, the seller may be required to pay the import duties. In the absence of clear contractual arrangements, the importer could be left bearing the costs but may still invoke clauses on price adjustment, change in law, or other remedies that shift costs to the buyer (see below). It is vital to analyze the terms of delivery, such as the Incoterms® rules or similar provisions, and assess whether the current pricing structure remains workable in light of the new tariffs.

2. Pricing clauses

Your agreement may include contractual provisions that enable periodic price revisions whenever relevant cost factors change drastically. In many commercial arrangements, a formula tied to cost-based indices is used, ensuring that prices either adjust automatically at set intervals or in response to specific triggers. These built-in mechanisms can offer a relief to businesses exposed to tariff-related cost increases or surging supplier prices, by passing on some portion of your heightened expense downstream in your supply chain.

However, particular attention should be paid to the validity of such pricing clauses under Belgian law. For example, the Belgian Law of 30 March 1976 on Economic Recovery Measures only allows parties to include pricing clauses in certain commercial contracts provided that the underlying revision mechanism is limited to 80% of the final price (meaning that at least 20% is fixed from the outset), each cost parameter genuinely reflects real cost increases, and each such parameter only affects the share of the price that corresponds to the underlying expense in question.

3. Force Majeure 

Merely facing higher costs for supplying goods due to tariffs is usually not sufficient to claim force majeure. Most legal systems, including Belgium, do not consider increased expense alone to justify a general suspension of obligations unless the contractual force majeure clause or another provision expressly covers “economic hardship” or “extreme price fluctuations.” Under the (often contractually excluded) UN Convention on Contracts for the International Sale of Goods (CISG), Article 79 of the CISG excuses non-performance if the affected party can show that it was due to an impediment beyond his control that he could not reasonably have expected, avoided or overcome. However, courts typically impose high thresholds, and mere financial unfeasibility is rarely enough, unless the altered circumstances are so unforeseeable that they make contractual performance unreasonably difficult or effectively impossible. Whether new tariffs in today’s political arena are genuinely unforeseeable is a complex question that often depends on the intentions of the parties when the contract was formed.

4. Hardship

Your commercial contract may have tailored (or excluded) the possibility of amending/renegotiating/terminating the contract on the basis of (financial or more general) “hardship”. But even in the absence of express clauses covering hardship or unforeseen events, many jurisdictions, particularly within the civil law tradition, provide statutory or judicial mechanisms that allow parties to seek contract adaptation when circumstances radically change. While these legal avenues can offer a measure of protection to parties confronted with severe economic disruptions, the specific requirements for invoking them remain strict in most jurisdictions, and mere financial difficulty typically does not, on its own, constitute a valid reason to renegotiate or set aside a contract.

Although Belgian law did not for a long time provide a general statutory mechanism for dealing with hardship arising from radically changed circumstances, recent legislative reforms have introduced an explicit hardship doctrine (applicable to contracts signed/amended/renewed as from 1 January 2023). Under Article 5.74 of the new Book 5 of the Belgian Civil Code, parties may, under certain conditions, request renegotiation when performance of the contract has become excessively burdensome due to unforeseen events. Such renegotiation may lead to modification or even termination of the contract if an agreement cannot be reached. While this newly codified approach places Belgium broadly in line with several other European jurisdictions, there is still significant uncertainty as to how courts interpret these conditions for hardship. As a result, parties have often incorporated contractual provisions, rather than relying solely on statutory hardship rules to justify contract adjustment or termination.

5. Change in law clauses

It is prudent to examine whether any ‘change in law’ clauses in your contract can be invoked when new tariffs or retaliatory measures drastically alter the economic or legal environment of the agreement. Such provisions can permit renegotiation or - in some cases – even termination if new legislative or regulatory requirements make performance prohibitively expensive or unlawful. While the introduction of higher tariffs might amount to a qualifying “change,” the language of the clause must typically be specific enough to capture material cost alterations and any resulting illegality. 

Specifically for Belgium, if a contract’s change in law-provision is vague or narrowly defined, Belgian courts may interpret it strictly, and a simple cost increase may not automatically trigger renegotiation or termination. Parties confronting sudden tariffs or new trade restrictions are therefore well advised to double-check change in law-clauses and to verify whether these clauses address any such cost implications.

6. Termination clauses

If it appears that substantially higher tariffs cannot be fully recovered through contractual pricing mechanisms, you may consider your option to terminate the agreement. Some contracts include provisions allowing termination if significant adverse economic changes or major cost increases occur. Other agreements feature a ‘termination for convenience’ clause, which permits one party to end the contract without specifying reasons (often subject to either a notice period or payment). Where no such provisions exist, parties might negotiate a mutual termination or an amendment to the contract, particularly when neither side benefits from a deteriorating or unprofitable deal.

How to ensure supply chain resilience in future contracts

In light of the ongoing volatility in US trade tariffs (and possible EU retaliatory measures), resilient supply relationships require proactive measures at the contract-drafting stage. The following considerations may prove valuable when drafting your commercial contracts:

• include explicit language that addresses the possibility of new tariffs or retaliatory trade measures, ensuring that potential cost increases or supply disruptions are properly accounted for in advance;
• pay particular attention to the applicable Incoterms® rules or similar delivery stipulations that define import responsibilities;
• clearly define which party is the importer of record to establish who is responsible for compliance with import regulations and bears the financial obligations of new duties or tariffs;
• incorporate dedicated provisions that allow for price adjustments,  which can help maintain economic equilibrium if production or delivery costs suddenly escalate owing to tariffs;
• draft comprehensive force majeure clauses that recognize not only the conventional grounds for excusing performance, but also specific triggers like economic hardship, unforeseen tariff surges, or import barriers;
• refine your change in law-clause to ensure that it adequately addresses the legal or cost implications arising from trade tariffs;
• carefully select governing law and dispute resolution processes (bearing in mind that the UN Convention on Contracts for the International Sale of Goods (CISG) may apply unless expressly excluded);
• provide for flexible renegotiation and/or termination rights (especially in long-term or fixed-price agreements).

Conclusion

The US government’s new tariffs can have wide-ranging financial and legal repercussions for European and other international businesses. Clauses concerning price adjustment, legislative changes, force majeure/hardship and termination are of fundamental importance when assessing how to manage, (re)negotiate or possibly terminate a contract. Within existing agreements, careful examination of all provisions (directly or indirectly) related to import duties ensures clarity about who ultimately bears the increased cost. In future contracts, it is advisable to incorporate provisions that clearly allocate the cost of rising tariffs or that allow for price adjustments or termination. This contractual anticipation helps parties protect themselves against the consequences of shifting global trade policies. The uncertainty of today’s global trade climate makes it more important than ever to establish clear agreements from the outset and to remain vigilant for emerging risks and obligations.