The imposition of tariffs on imports from various countries is significantly affecting numerous sectors of the U.S. economy, including the construction industry. Attorneys Stacy Bercun Bohm and Trav Clark from Akerman law firm in Miami highlight measures that project owners can take to mitigate tariff effects on current contracts. While negotiating new provisions into future agreements is straightforward, addressing existing contracts requires a more detailed approach. This involves reviewing contract terms, engaging with general contractors, and ensuring thorough documentation of cost increases.

Understanding the specifics of your existing contract is crucial when dealing with tariff-induced price escalations. Owners should carefully examine the agreed-upon terms, particularly how project costs were determined. Whether based on a fixed fee, cost-plus arrangement, or guaranteed maximum price, each structure carries its own implications for handling escalating material costs. For instance, if the contractor's compensation includes a stipulated sum, check for any anti-escalation clauses binding them to the original price. In cost-plus scenarios, investigate whether contingency funds must cover price hikes or if contractors are obligated to secure prices for high-value items early in the project timeline. If these clauses exist and have been adhered to, owners may benefit from pre-tariff pricing. Conversely, failure to comply might hold contractors accountable for securing better rates before tariffs took effect.

Beyond contractual analysis, fostering open communication with the general contractor is vital. Early discussions can help identify materials sourced internationally that could be affected by tariffs. Requesting a list of outstanding foreign-sourced materials allows for focused problem-solving. Should international sourcing remain necessary, encourage contractors to reassess their subcontract sums, factoring in taxes, tariffs, customs, and duties. Alternatively, explore domestic procurement options or pre-fabrication possibilities to reduce costs. Such proactive measures can alleviate financial burdens associated with tariff-imposed price surges.

When cost increases become unavoidable, insist on comprehensive documentation from contractors and subcontractors. Essential documents include invoices detailing payments for impacted materials, evidence of anticipated pre-tariff prices, port invoices reflecting tariff charges, container packing lists, and explanations of applicable tariffs' cost impacts. Such records not only substantiate claims but also provide clarity during negotiations or potential disputes.

In these uncertain times, it's imperative for construction industry stakeholders to recognize available options within existing contracts. By thoroughly reviewing contract terms, maintaining transparent communication with contractors, and demanding proper documentation, owners can effectively manage tariff-related challenges. Consulting a construction attorney further ensures all avenues for mitigating impacts are explored, safeguarding project viability amidst economic fluctuations.