Tariff Worries Force Firms To Rethink Contracts

By: Sebastian Obando

Cohen Seglias partner Matthew Long discussed the resurgence of material price escalation clauses in response to new tariffs proposed by the Trump administration. In Construction Dive, he noted that while such clauses became standard during the pandemic, contractors have struggled to secure them in recent years. However, he expects a shift as the industry adapts, stating, “Material price increase terms became more common during the first Trump administration, and were ubiquitous during the pandemic… Contractors have continued to request material price escalation terms in recent years, with less success.” With tariffs once again driving up costs, contractors may push harder for contractual protections against market volatility.

Contractors are bracing for a fresh wave of material price hikes as President Donald Trump’s new and proposed tariffs fuel concerns across the construction industry.

Similar policies enacted during Trump’s first term caused benchmark steel prices to jump 14% before settling at a 10% increase by the end of 2019. Now, with nonresidential construction spending already slipping and material costs climbing ahead of new tariffs, contractors are once again weighing how to protect themselves from sudden price swings.

This time, contractors have a playbook for how to respond.