Federal tariffs are raising input costs, straining supply chains and putting pressure on fixed-price contracts across Pennsylvania’s manufacturing sector. When those pressures make it harder or more expensive to perform, the natural instinct is to look to the contract for relief. Many manufacturers are turning to force majeure clauses, and most are finding far less protection than they expected.
WHAT PENNSYLVANIA COURTS ACTUALLY REQUIRE
A force majeure clause excuses a party from performance when an unexpected event beyond that party’s control delays or prevents performance. Pennsylvania courts interpret these clauses narrowly, focusing closely on the specific language of the clause to determine what the parties agreed upon. Mere inconvenience or increased expense does not meet the threshold for excusing performance.
Pennsylvania courts require the party invoking the clause to prove that the event was beyond their control, was not caused by their own fault or negligence, that they used reasonable efforts to mitigate its impact, and was not contemplated at the time of contracting. Pennsylvania’s version of the Uniform Commercial Code provides a parallel framework, excusing performance only where a contingency arises whose non-occurrence was a basic assumption of the contract and where performance has been rendered genuinely impracticable, not merely more costly.
WHY TARIFF-DRIVEN COST INCREASES ALMOST NEVER QUALIFY
Pennsylvania courts have applied these principles directly in the manufacturing context. Pennsylvania courts made clear that increased material costs do not constitute commercial impracticability, the difficulty must render performance objectively impossible or impracticable, not just less profitable. The commentary to the Uniform Commercial Code’s codification of commercial impracticability is equally direct: increased cost alone does not excuse performance unless it results from an unforeseen contingency that fundamentally alters the nature of performance. Normal fluctuations in wages, raw material prices and market conditions are foreseeable business risks that parties absorb when they agree to fixed pricing.
Foreseeability is equally important. In Frank B. Bozzo, Inc. v. Electric Weld Division, the Pennsylvania Superior Court found no impracticability where a seller failed to anticipate later performance demands and stock materials accordingly. In Hancock Paper Co. v. Champion International Corp., a federal court applying Pennsylvania law held that a drop in market price, even if caused by outside forces, is an unanticipated difficulty, not a supervening impossibility that would allow for relief. Manufacturers negotiating or renewing contracts today face a straightforward problem: tariff-driven cost increases are no longer unforeseeable. Courts are likely to treat them as a known business risk that should have been addressed in the contract itself.
WHAT MANUFACTURERS SHOULD DO NOW
For existing contracts, the first step is a careful review: locate the force majeure clause, read it closely, and determine whether tariffs or government trade actions are expressly listed as triggering events. Even where a formal legal defense is unlikely to succeed, invoking the clause can be a platform for commercial renegotiation, an opportunity to reach a practical resolution before the situation becomes a dispute.
For any new contract, renewal or amendment, explicit language is essential. Manufacturers should push for provisions that expressly identify tariffs as force majeure events and clarify whether cost increases, not just physical impossibility, can trigger relief. Price adjustment clauses tied to defined tariff thresholds are a great practical alternative. Pennsylvania courts construe ambiguous contract language against the party that accepted it, and the boilerplate in many existing manufacturing agreements may not hold up when needed most.
For more information, visit macdonaldillig.com.
Stephen Rinderle is an associate at MacDonald Illig Attorneys and his practice area focuses on Business Transactions.
