Trump's Trade Tango - Executive Orders Meet Commercial Contracts

With his first Executive Orders on tariffs already taking effect, US President Donald Trump has almost instantly thrown the world economy into turmoil.

Trump’s announced - but for now postponed - tariffs against Canada and Mexico to stop illegal immigration and the illicit fentanyl trade and the tariffs on imports from China are most likely to be followed by tariffs against the EU in Trump’s pursuit of his “America First” strategy.

This in turn will expectedly lead to retaliatory taxes and tariffs from these countries, throwing the world into a full-blown trade war leading to higher prices for a large variety of goods and services.

We have already seen businesses change their terms and conditions to pass on any price increases caused by these tariffs to their customers. 

If your company does not have this option, you may end up as the “piggy in the middle” where you, on very short notice, will have to pay a higher price to deliver your goods or services, but cannot pass these cost increases on to your customers.

We therefore encourage our clients to carefully review their contracts - both with suppliers and customers – and their sourcing strategy in general to handle these challenges in the best possible way. 

Feel free to reach out to either of the undersigned or your other contacts at Bird & Bird if you need help reviewing your contracts and getting strategic advice on your commercial contracts in this fast-changing political landscape.