Tariffs and Your Business Contracts:
A 2026 Legal Guide

If you buy or sell goods for a living, the last eighteen months have been a whipsaw. Tariffs went up, got struck down by the Supreme Court, got refunded, and then came right back under different legal authority. As we write this, the average applied tariff rate on goods entering the United States sits near its highest level in roughly eighty years, and nobody in the trade world expects that to change soon.

We have run businesses ourselves before we practiced law, so we know what a twenty point swing in input costs does to a quarter. It does not just dent margin. It can turn a signed contract into a money loser overnight. The instinct at that point is to reach for the force majeure clause and try to walk away. Here is the hard truth most Oklahoma business owners learn the expensive way: that clause almost never covers a tariff. This guide explains why, and shows you the contract language that actually protects your business.

Table of Contents

• The 2026 Tariff Reality: What Actually Changed
• Why Force Majeure Usually Will Not Save You
• Impossibility and Commercial Impracticability
• The Drafting Fixes That Actually Work
• Managing Contracts You Are Already Stuck In
• Practical Tools Beyond the Contract
• Oklahoma-Specific Considerations
• Your Contract Audit Checklist
• When to Get Legal Help

The 2026 Tariff Reality: What Actually Changed

To protect your contracts, you first need an accurate picture of the current landscape, because it shifted dramatically in early 2026 and a lot of business owners are still operating on old information.

On February 20, 2026, the Supreme Court ruled 6 to 3 in Learning Resources, Inc. v. Trump that the International Emergency Economic Powers Act (IEEPA) does not give the President authority to impose tariffs. That decision, authored by Chief Justice Roberts, wiped out the sweeping “reciprocal” tariffs and the fentanyl related tariffs on Canada, China, and Mexico. The IEEPA tariffs formally terminated a few days later, and Customs stopped collecting them. Importers who paid those duties may be entitled to refunds, an issue the Court sent back to the lower courts, where the government has stipulated it will refund IEEPA tariffs once the process concludes.

If you stopped reading the news there, you might think tariffs went away. They did not. On the very same day the IEEPA tariffs fell, a new 10 percent global tariff went into effect under a different statute, Section 122, with a built in 150 day expiration. Layered on top of that are a set of product specific tariffs that carry no expiration date at all.

The takeaway for your contracts is not any single rate. It is the volatility itself. A tool that can be created, struck down, refunded, and rebuilt under a new statute inside a few months is not a stable planning assumption. Trade experts broadly agree that higher tariffs are now a durable feature of the business environment, not a passing storm. That means your agreements need to allocate this risk on purpose, rather than leaving it to a clause that was never designed for it.

Why Force Majeure Usually Will Not Save You

When costs spike mid contract, the force majeure clause is the first place most owners look. It feels like the emergency exit. In practice, it is usually locked.

A force majeure clause excuses a party from performing when an extraordinary event beyond its control makes performance impossible. The classic examples are hurricanes, floods, wars, and government embargoes. Courts read these clauses narrowly, and that narrow reading is exactly where tariff arguments fall apart.

The core problem is that a tariff usually does not make performance impossible. It makes performance more expensive. You can still ship the goods. You just lose money doing it. As force majeure doctrine is generally applied, a mere increase in cost, even a severe one that wipes out your entire margin, is not the kind of event that excuses performance. Courts routinely reject economic hardship as a basis for invoking the clause.

There are narrow situations where force majeure can help. If a tariff or a related trade action does not just raise your cost but actually cuts off your supply, for example by making a critical component unavailable rather than merely pricier, you have a stronger argument that performance became impossible. Supply chain collapse is different from supply chain expense. But that is a high bar, and it is not the situation most owners are in. Most of the time, the goods are available. They just cost too much.

One more trap worth naming: even when a force majeure clause could apply, the mechanics matter. These clauses almost always require prompt written notice and a duty to mitigate. Miss the notice window or fail to document your mitigation efforts, and you can forfeit relief you were otherwise entitled to. If you ever think you might need to invoke force majeure, read the procedure section of the clause before you do anything else.

Impossibility and Commercial Impracticability

If the contract has no force majeure clause, or the clause does not fit, the next fallback is a set of common law and statutory doctrines: impossibility and commercial impracticability. For contracts involving the sale of goods, the relevant rule is the doctrine of commercial impracticability under the Uniform Commercial Code, which Oklahoma has adopted.

These doctrines excuse performance when an unforeseen event makes performance impracticable. The trouble, again, is that cost increases usually do not clear the bar. Fixed price contracts are presumed to allocate exactly this kind of risk. When you agree to sell at a set price, the law generally assumes you accepted the possibility that your costs might rise. A tariff that raises your input cost is treated as the type of market risk a fixed price contract was designed to place on the seller.

In some jurisdictions the impracticability standard is even harder to meet than a force majeure clause, requiring a more substantial and demonstrable disruption. And courts expect you to make reasonable efforts to overcome the obstacle before you claim performance is excused. In short, do not build your risk strategy on the hope that a judge will later rescue you from a bad price. The doctrines exist, but they rarely deliver for tariff driven cost problems. The reliable protection is written into the contract before the ink dries.

The Drafting Fixes That Actually Work

Here is the good news. Everything the doctrines will not give you, careful drafting can. If you buy or sell goods exposed to trade policy, these are the provisions that belong in your agreements going forward.

1. Name Tariffs Explicitly in Your Force Majeure Clause

A generic “acts of government” catchall is weak. Strengthen the clause by naming the specific events you care about: tariffs, duties, quotas, embargoes, import and export restrictions, and changes in law. When the triggering events are spelled out by name, you remove the argument about whether a tariff counts. You also want the clause to state clearly what happens when it triggers, whether that is a right to suspend performance, renegotiate price, or terminate on notice.

2. Add a Price Escalation Clause Tied to Tariffs

This is the single most useful tool for sellers. A price escalation clause lets you adjust the contract price when a defined cost crosses a baseline. Escalation clauses are common for volatile inputs like steel, lumber, and fuel. The same mechanism can be written to respond to tariff changes. For example, the clause can allow a price adjustment if a newly imposed or increased tariff raises your landed cost of a specified component by more than an agreed percentage. This keeps the deal alive and shares the pain, rather than forcing an all or nothing fight.

3. Use a Tariff Allocation or Pass Through Provision

Rather than absorbing tariff swings yourself, spell out who bears them. A tariff allocation provision states plainly which party is responsible for new or increased duties, and how those costs flow through the price. Buyers and sellers will push in opposite directions here, and that is fine. The point is to decide the question in the contract instead of litigating it later.

4. Build in Renegotiation and Exit Triggers

For longer term supply agreements, consider a clause that opens a renegotiation window, or permits termination, if cumulative tariff increases exceed a defined threshold of contract value. This gives both sides a pressure valve and an incentive to come back to the table before the relationship breaks.

Managing Contracts You Are Already Stuck In

Drafting advice is cold comfort if you signed a fixed price deal last year and the tariffs already blew up your margins. If that is where you are, you still have moves. Approach it as a business decision with legal inputs, not as a search for a magic exit.

Start by defining your goal. Do you want to pass costs through, hold the other side to the deal, renegotiate price, pause performance, or exit entirely? Each goal points to different leverage. Then work the practical levers in order:

• Re examine your own clauses first. Read your force majeure, price, and change in law provisions with fresh eyes. You may have more room than you assumed, or you may confirm you have none, which is itself useful to know.
• Open a candid renegotiation. Your counterparty is often feeling the same squeeze. A negotiated price adjustment that keeps a good customer relationship intact frequently beats a legal standoff for both sides.
• Run the breach math honestly. In some cases the rational move is to breach and pay damages rather than lose money on every shipment for the life of the contract. That is a hard calculation, and you should run it with counsel, but it belongs on the table.

Whatever path you choose, follow any notice and mitigation requirements to the letter and document everything. If this ever ends up in front of a judge, your paper trail of good faith efforts will matter.

Practical Tools Beyond the Contract

Some of the most effective tariff relief has nothing to do with contract language at all. Before you assume a duty is fixed, check whether it actually applies at the rate you think.

Verify your tariff classification. Every imported product is assigned a code under the Harmonized Tariff Schedule, and the code determines the rate. Classifications are technical, and a component that has been coded one way for years may actually fit a different heading that carries a lower duty. Because the last digits of the code can be specific to the United States, small distinctions matter. Having a customs broker or trade attorney review your classifications can produce real savings, and Customs and Border Protection is the only authority that can issue a legally binding ruling on classification.

Look into exclusions and sourcing. Where the government runs exclusion processes for specific tariff actions, it may be worth requesting one, even though the process is slow and uncertain. And because many tariffs are country specific, shifting part of your supply chain to a supplier in a lower tariff country can change your cost structure. Both moves take planning, but both can matter more than any clause.

Track the moving target. Because rates change constantly, it pays to follow a reliable, nonpartisan source. Trackers maintained by groups like the Tax Policy Center and analysis from institutions like Brookings can help you separate signal from noise.

Oklahoma-Specific Considerations

Oklahoma businesses are more exposed to tariff volatility than many owners realize, because so much of the state’s economy runs on physical goods and imported inputs.

Our manufacturers, energy services companies, agricultural operations, and construction firms all rely on materials that now carry meaningful duties. Steel and aluminum at 50 percent hit fabrication shops, oilfield service providers, and builders directly. Equipment and machinery components sourced from abroad flow into nearly every industrial operation in the state. If your business signs fixed price supply agreements or bids fixed price jobs, a mid project tariff swing can erase the profit you counted on when you quoted the work.

On the legal side, Oklahoma follows the Uniform Commercial Code for sales of goods, which means the commercial impracticability analysis discussed above governs many of these disputes here. As explained, that doctrine rarely excuses a party from a fixed price simply because a tariff raised costs. Oklahoma courts, like courts elsewhere, generally hold parties to the risk allocation they agreed to. That makes proactive drafting especially important for local businesses.

There is an upside worth remembering too. Oklahoma remains one of the most affordable states in the country to form and run a business, with low formation costs and a repealed franchise tax. Companies that get their contracts right can use that cost advantage to stay competitive even in a high tariff environment, underbidding rivals who are absorbing tariff losses they never planned for. Getting your commercial contracts and corporate strategy aligned is how you turn a defensive posture into an offensive one.

Your Contract Audit Checklist

Whether you are drafting new agreements or reviewing existing ones, run this audit on any contract that touches imported goods or fixed pricing.

When to Get Legal Help

Tariff policy is moving faster than most contracts were written to handle, and the stakes scale with your volume. Consider bringing in counsel when you are negotiating any significant supply or sales agreement exposed to imported goods, when you are staring at an existing contract that tariffs have turned upside down, or when you are weighing whether to renegotiate, invoke a clause, or walk away.

The right time to allocate tariff risk is before you sign, but even mid contract there are usually more options than a stressed owner can see alone. A focused review of your agreements now, while you still have room to maneuver, is far cheaper than a dispute later. If you are also thinking about the bigger picture, our guide to the legal roadmap to selling your business covers how clean, well drafted contracts raise the value of everything you build.

Frequently Asked Questions

• Can I get out of a contract because tariffs wiped out my margin?

  Usually not on the basis of cost alone. Courts generally hold parties to fixed price contracts even when tariffs raise costs sharply, because a fixed price is presumed to allocate that risk to the seller. Your best options are typically renegotiation, a clause that specifically addresses tariffs, or a hard business calculation about whether breaching and paying damages costs less than performing at a loss.

• Does force majeure cover tariffs?

  Only if your clause is written to cover them. A generic “acts of government” phrase often is not enough, because courts read these clauses narrowly and a tariff usually makes performance more expensive rather than impossible. Naming tariffs, duties, and trade restrictions explicitly in the clause is what makes the difference.

• How do I protect new contracts from tariff swings?

  Build in a price escalation clause tied to defined cost thresholds, a tariff allocation provision that states who bears new duties, and a renegotiation or termination trigger for large cumulative increases. Also name tariffs directly in your force majeure clause. Together these tools share and manage the risk instead of leaving it to chance.

• What if my supplier tries to invoke force majeure against me?

  Read their clause and the underlying facts carefully. If they are claiming force majeure based only on higher costs, they may not meet the standard, and you may be able to hold them to the deal. Check whether they followed the required notice and mitigation steps, since a procedural failure can defeat the claim. This is a situation where a quick legal review pays for itself.

• Didn’t the Supreme Court get rid of the tariffs in 2026?

  It struck down one major category, the tariffs imposed under IEEPA, in February 2026. But other tariffs remain in force under different legal authorities, including product specific duties on steel, aluminum, copper, autos, and semiconductors, plus a broad global tariff and China specific tariffs. Overall rates remain near historic highs, and the volatility is exactly why contracts still need to address tariff risk.

• Should I keep signing fixed price supply agreements right now?

  You can, but not blindly. If you sign a fixed price deal for tariff exposed goods, you should pair it with a price adjustment or tariff allocation mechanism so a rate change does not fall entirely on you. If the other side will not agree to any adjustment language, price that risk into the number or shorten the term.

Disclaimer: This article provides general information about tariffs and commercial contracts and should not be considered legal advice. Trade policy is complex and changing rapidly, and tariff rates and legal authorities cited here may change after publication. Each contract and business situation involves unique facts requiring individualized analysis. For guidance specific to your agreements and operations, consult qualified Oklahoma business attorneys.

About Cantrell Law Firm: We are Oklahoma business attorneys and former entrepreneurs who help companies structure contracts, allocate risk, and navigate a shifting regulatory environment. Our practical approach combines real world business experience with strategic legal planning so clients can protect their margins and keep growing. Contact us to discuss your business contract needs.