Trump Tariffs Behoove Business to Plan Ahead to Reduce Cost Risk

The increasing use of tariffs by the Trump administration has exposed US companies to newer and more severe commercial, litigation, and enforcement risks.

Businesses now navigate a complex landscape of tariffs imposed under multiple trade authorities—ranging from decades-old mechanisms to the novel application of other statutes to impose duties. These new duties can threaten critical supply chains and corporate balance sheets.

These actions have created significant operational and compliance challenges across industries. In addition to sharply increasing costs, the unpredictability of tariff rates and implementation complicates long-term investment and planning for companies.

In this new era, mitigating risk requires companies to take preemptive action with suppliers and even with customers.

President Donald Trump has invoked unconventional statutory authorities to expand his tariff power. During his first term, he started the practice of imposing tariffs on national security grounds and, more recently, relied on the International Emergency Economic Powers Act—a statute traditionally reserved for sanctions—to impose various tariffs.

On Feb. 20, the US Supreme Court struck down the use of IEEPA to impose tariffs. Shortly after the decision was released, the president announced his intention to impose a new 10% global tariff under the Trade Act of 1974, a similarly unconventional authority that allows for tariffs of up to 15% for 150 days. A day later, he threatened to impose the maximum 15% tariff, although that threat hasn’t yet materialized.

The White House likely will initiate investigations under other tariff provisions as it aims to replace the IEEPA duties under new authorities. Meanwhile, the US continues to impose various tariffs and duties under more conventional tariff authorities, including anti-dumping and countervailing duty orders.

The US Customs and Border Protection and the Department of Justice have increased tariff evasion enforcement, with the DOJ increasingly relying on the False Claims Act. That act creates additional potential liability (that may include treble damages and significant penalties), not only for importers of record, but also for suppliers, customs brokers, and other parties.

Companies can reduce exposure by implementing the following strategies and protective contractual provisions.

Protect Supply Chain

US companies must keep a close eye on the countries and companies from which they are sourcing. Even if a company isn’t ultimately responsible for tariffs on the imports it is purchasing, tariff levels can negatively affect supply chains.

If the company is responsible for any tariff costs, it’s particularly important to ensure that controls are in place to monitor tariffs. Companies should consider extending these controls to their suppliers through contractual mandates and audit rights, ensuring every supplier is transparent about how changing tariff costs may impact sourcing.

The volatile trade environment means imports may suddenly be subject to high tariffs. US companies should try to configure flexible supply chains capable of addressing potential tariff pressures. This includes developing contingency plans for alternative suppliers in low-tariff regions, planning for product substitutions or local sourcing in case of a tariff spike, and implementing tariff monitoring systems to quickly adapt supply chains to shifting policy.

Companies may want to incorporate flexibility into contracts with suppliers by including provisions that provide exit strategies and oversight mechanisms. Termination provisions should be broad enough to trigger a default if a supplier fails to agree on required pricing adjustments, provide adequate assurance of performance upon request, or comply with sourcing restrictions.

Buyers should secure audit rights and advance approval requirements for any changes to manufacturing locations. These provisions should be paired with robust indemnification clauses that obligate suppliers to cover losses arising from noncompliance.

Buyers may consider liquidated damages provisions to allocate risk related to tariff- or regulatory-driven delays, provided such provisions are carefully drafted to reflect a reasonable estimate of anticipated harm. These measures give buyers the flexibility to exit a noncompliant or commercially unviable agreement without incurring excessive penalties.

Robust Customs Compliance

Considering increased customs compliance enforcement, importers should maintain robust customs compliance programs. In addition to CBP actions, companies should be aware of enforcement mechanisms such as the DOJ’s Trade Fraud Task Force, which dedicates increased resources to criminal and civil enforcement of trade and customs fraud and empowers the government, as well as private whistleblowers, to take civil action against parties involved in tariff evasion schemes.

Inaccurate customs declarations related to classification, valuation, or country of origin can expose companies to not only CBP action, but also FCA liability if they are deemed to have acted with reckless disregard or deliberate ignorance when making customs declarations. As tariffs expand to cover more products and industries, companies are finding errors that previously carried minimal consequences may now result in substantial liability and penalties.

Even if a company isn’t the importer of record, it should still maintain vigilance regarding customs compliance issues due to FCA liability for parties who contribute to the submission of false customs documentation. Companies should consider including contract language requiring suppliers to maintain effective customs compliance programs, provide periodic certifications of compliance, and implement employee training.

Where a supplier becomes subject to a customs investigation or enforcement action, buyers should consider exercising contractual rights to demand adequate assurances of performance or temporarily suspend payments pending confirmation of compliance.

Identify Tariff Responsibility

Both buyers and suppliers should consider explicit allocation of import duty responsibilities when contracting, even if goods aren’t currently being sourced from a high-tariff or high-risk region.

As tariffs have become increasingly unpredictable, parties should integrate tariff adjustment clauses or structured renegotiation mechanisms triggered by materially increased duty costs. Absent express contractual language, courts are unlikely to treat tariff increases alone as force majeure events, underscoring the importance of clear risk-allocation provisions.

Supplier Considerations

While buyers seek maximum flexibility, suppliers should negotiate guardrails to prevent rushed terminations, such as reasonable cure periods to address sourcing deviations or compliance concerns. When accepting audit rights, suppliers should consider limitations regarding timing, scope, and the use of independent auditors to protect proprietary information.

Companies face significant legal and operational challenges in the current trade environment. Proactive measures such as monitoring and compliance systems and contractual safeguards can help reduce risk and maintain supply chain stability.

The case is Learning Resources Inc. v. Trump, U.S., 24-1287 and 25-250, opinion 2/20/26.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

Jarod Stewart is a partner and chair of Steptoe’s Commercial Trials & Litigation group. He primarily focuses on helping clients in the energy and healthcare industries.

Patrick Linehan is a partner at Steptoe who focuses on corporate and individual clients in internal investigations, criminal investigations/trials and civil litigation.

Stephanie Wang is a partner at Steptoe who focuses on international trade matters and has represented US and foreign companies across a range of industries, including the energy, steel, chemical, financial, and mining sectors.

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