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How to build a more resilient procurement strategy amid tariff volatility (without changing your suppliers)

Copied!

What enterprise procurement leaders are doing to manage rising tariff volatility—starting with
their contracts

Tariffs aren’t just trade policy—they’re profit risks

In the last five months alone, procurement leaders across global enterprises have faced
escalating uncertainty:

• New tariffs on Chinese EVs, batteries, and tech components
• Speculation around EU–US trade policy post-election
• Ongoing Russia–Ukraine fallout affecting metals, fertilizers, and grain
• Border policy shifts disrupting automotive and agriculture supply chains

These aren’t just headlines, they're variables in every supplier agreement that touch pricing, delivery timelines, and cost structures. And yet, the smartest procurement leaders aren’t rushing to replace suppliers. They’re doing something else: renegotiating smarter, using contract terms as their risk shield.

What procurement teams at leading firms have done over the last 5 months

We spoke with over 10 procurement heads across manufacturing, CPG, tech, pharma, and food sectors to learn how they’ve adapted their contracts in response to recent tariff shifts.
Here’s what emerged:

‍

Renegotiation and Price Adjustment Clauses

Best Practice: Define “material change” thresholds

Include a trigger for renegotiation when tariffs increase landed costs by a defined percentage (e.g., 5%). This gives procurement a legal and operational basis to reprice or exit.

Clause to review:
☑️ Renegotiation Clause
☑️ Material Adverse Change (MAC) Clause

‍

Best Practice: Move from ad-hoc to structured pass-through logic

Avoid supplier claims based on general cost increases. Instead, require suppliers to tie tariff pass-throughs to specific indices or HTS codes. Make calculation methods transparent and consistent.

Clause to review:
☑️ Price Adjustment Clause
☑️ Tariff Surcharge Addendum

‍

Force Majeure and Hardship Provisions

Best Practice: Clarify that tariffs ≠ force majeure

Update FM clauses to state that economic hardship from tariff increases alone does not excuse performance unless they cause legal or regulatory impossibility.

Clause to review:
☑️ Force Majeure Clause
☑️ Government Action Exception

‍

Best Practice: Use hardship clauses for structured re-evaluation

In long-term or international contracts, embed a hardship clause that allows for good-faith renegotiation if tariff shifts fundamentally alter contract economics, especially in ICC- governed or civil law jurisdictions.

Clause to review:
☑️ Hardship Clause
☑️ Equitable Adjustment Clause

‍

Supply Chain Flexibility Clauses

Best Practice: Allow alternate sourcing in tariff-impacted regions

Enable substitution of suppliers or materials when tariffs affect a specific geography—without triggering breach under exclusivity or MOQ terms.

Clause to review:
☑️ Source Substitution Clause
☑️ Approved Supplier Flexibility Clause

‍

Best Practice: Revisit delivery and lead-time tolerances

Include clear expectations for cross-border delays linked to customs, inspections, or document requirements due to new tariffs. Define who bears liability for shipment delays caused by trade barriers.

Clause to review:
☑️ Delivery Terms Clause
☑️ Late Delivery Penalty Clause

‍

Compliance and Regulatory Clauses

Best Practice: Build in audit rights to validate tariff claims

Include right-to-audit language that lets procurement verify supplier assertions around tariff imposition, HTS classification, or eligibility for exemptions and refunds.

Clause to review:
☑️ Audit Rights Clause
☑️ Record-Keeping Requirement

‍

Best Practice: Embed proactive compliance requirements

Mandate that suppliers maintain updated import/export documentation and assign clear responsibilities for managing licenses, exemptions, or filings.

Clause to review:
☑️ Regulatory Compliance Clause
☑️ Import/Export Responsibilities Clause

‍

Why this works: You’re not rebuilding. You’re reinforcing.

The biggest takeaway from every conversation? You don’t need a supplier overhaul to build resilience. You need contractual control. Instead of reacting to every tariff or trade scare, these teams have:

• Rewritten their terms to shift timing and accountability
• Structured renegotiation windows to favor flexibility
• Removed ambiguity from pass-through logic
• Enabled real-time visibility into exposure

‍

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