June 26, 2019 Article

Construction Alert: U.S. Supreme Court Declines to Knock Down Tariffs

Construction Alert

The United States Supreme Court announced Monday that it will not take up a steel importer group’s challenge to President Trump’s broad authority to impose tariffs and set trade restrictions. The High Court rejected the American Institute for International Steel’s petition seeking to hold the 25% tariffs on steel imports that Trump imposed in 2018 unconstitutional, and declined to accept the petition without comment or dissent. This decision not to weigh in leaves the President’s ability to impose additional tariffs unchecked, as the President considers further tariffs against China, Iran and our North American and European allies.

+++IMPORTANT+++ Standard form contracts, such as the AIA and ConsensusDocs do not include protections for sudden cost increases resulting from tariffs.

Locking in prices at the outset of a project is the most certain way to protect against cost increases, but this is not always possible.

Accordingly, Preti Flaherty's construction lawyers frequently amend contracts to include provisions such as "escalation clauses" that allow for a change order where material price increases above a specified percent.  While most public owners will not accept such provisions, these clauses are becoming increasingly common in private contracts, and may provide a valuable protection if a new round of tariffs is imposed.