President Trump announced on Thursday March 1, 2018 that his administration intends to impose a 25 percent tariff on imported steel and a 10 percent tariff on imported aluminum. Many details are lacking and official administrative action has not yet been implemented. Some countries may be exempt so the breadth of the tariffs is not yet known.
The construction industry relies on steel and aluminum and will likely face higher prices. Price escalation may result in delays, , a reduced scope, or projects being cancelled and a force majeure declared or a termination for convenience provision being exercised. Escalation clauses could also impact public projects adversely due to the fact that bidders cannot hold their prices for an extended period of time.
If you don’t have an escalation clause, you may be at the mercy of the owner to allow a change order for the increased material costs or you may be able to rescind.
If you’d like to discuss ways to manage this risk please review your agreements and speak with counsel about what steps you should consider.