This article focuses on three important clauses in direct federal contracting that dictate contractors’ rights and responsibilities when it comes to price escalation, increased costs, and taxes imposed after contract execution.
The Trump administration’s imposition of new tariffs is anticipated to have large-scale effects on costs in the construction industry. This article focuses on three important clauses in direct federal contracting that dictate contractors’ rights and responsibilities when it comes to price escalation, increased costs, and taxes imposed after contract execution. P&A has previously provided similar insights in the context of private contracts here and here.
Newly Imposed Tariffs
On February 1, 2025, the Trump administration issued executive orders imposing 25 percent tariffs on Canadian and Mexican goods, a 10 percent tariff on imports from China, and a 10 percent tariff on Canadian energy resources. Two days after the announcement, President Trump paused the tariffs on Canadian and Mexican imports for one month to conduct negotiations with these ally nations. The tariff on Chinese imports went into effect on Tuesday, February 4, 2025. In response, China announced it was implementing counter-tariffs against the United States, including a 15% tariff on coal and liquified natural gas products, as well as a 10% tariff on crude oil, agricultural machinery, and large-engine cars exported from the United States to China.
Reprinted courtesy of Abby Bello Salinas, Peckar & Abramson, P.C. and Michael A. Branca, Peckar & Abramson, P.C.
Ms. Salinas may be contacted at asalinas@pecklaw.com
Mr. Branca may be contacted at mbranca@pecklaw.com