US Tariffs | How to Draft Contracts to Handle Tariffs, Refunds, and Disputes

After “Liberation Day,” many foreign companies offered discounts to American importers to help them offset the tariffs. A few months later, the US Supreme Court declared the « reciprocal » tariffs unlawful, but on the same day, President Trump announced new tariffs. In this article, we provide a practical overview of how to handle various scenarios, shifting from a reactive, unstructured approach to deliberate management of price volatility and trade flows caused by the introduction, adjustment, and removal of tariffs.

Tariff Sharing agreements

For a long time, the question has been straightforward: who absorbs the extra customs cost? The exporter? The importer? Both? The question remains important, but today it is incomplete.

The new scenario, in light of the recent ruling by the US Court of Justice on March 20, 2026, is: what happens if that duty is then canceled and refunded? If the cost was shared between the parties, the benefit of the refund must follow a consistent logic. In the absence of a clear agreement on this point, however, there is a risk of economic misalignment that could compromise the commercial relationship.

Let’s imagine an Italian winery that sells its products to a US importer. Following the introduction of reciprocal duties, the parties have decided that the exporter will grant an extraordinary discount of 7.5%, explicitly motivated by the need to share the impact of the duty. The commercial relationship continues, volumes remain stable, and the importer avoids passing on the entire increase to the end customer.

As a result of the Supreme Court ruling (or, in the future, another ruling or administrative decision), the importer obtains a refund of the duties paid during that period.

If no formal agreements have been made on this point and the documentation refers generically to a « commercial discount » and says nothing about reimbursement, the situation afterward may be difficult to reconstruct and, above all, could lead to commercial tension. As a result, a positive development (the cancellation of the duty and the right to reimbursement) becomes a problematic factor that jeopardizes the relationship.

Is the exporter entitled to a refund of the discounts granted to mitigate the duties?

In the absence of a different agreement between the parties, the right to reimbursement belongs to the party who paid the duty, i.e., the importer. Therefore, there is a risk that the importer will enjoy a double benefit (the discount and the duty refund), while the exporter will get nothing.

For this reason, it is essential that the parties do not limit themselves to negotiating prices and discounts, but also establish the consequences of the adoption, modification, or revocation of duties on the contract, including any refunds.

To achieve this, the first step is to accurately classify and document the discounts granted. If only a « commercial discount » appears in emails, commercial orders, credit notes, and invoices, it will be harder to later argue that this discount was actually an extraordinary, temporary contribution related to the duty. Conversely, if the documentation and contract specify that it is a tariff sharing or tariff mitigation measure, identifying the amounts to be refunded after the fact becomes much simpler.

The goal is to create a clear view of the trend in discounts and payments so that, if needed, financial flows can be adjusted to align with the original terms of the agreement: if the exporter has helped cover a cost that then, in whole or in part, does not end up materializing, they will be eligible for a refund of the contribution paid.

The contract will therefore include, in addition to the Tariff Sharing clause, a Tariff Reimbursement Allocation clause, which states that if the importer receives a refund, credit, or any other economic benefit related to the duty for which the exporter has granted a discount, the importer must return the corresponding portion of the benefit to the exporter in full. or proportionally, depending on how the parties intend to distribute risk and incentive.

Importer’s responsibility to seek reimbursement

It is unclear whether, in the case of US reciprocal duties, importers can simply file an administrative claim to get a refund or if legal action will be required. The latter seems more probable.

Generally, obtaining a duty refund involves action, deadlines, documentation, and coordination with brokers and customs consultants. In most cases, the entity controlling the process is the importer (or someone acting on their behalf).

This raises a sensitive but very real issue: if the importer knows that they will have to invest time and money to obtain a refund, only to then have to share the benefit with the exporter, their incentive to take action may be reduced. To prevent this inertia  the contract should contain an express obligation to take action, set out as a duty of best efforts or commercially reasonable efforts.

For example, the contract should specify that the importer must inquire about the conditions and time limits of the process, keep relevant documentation, regularly inform the exporter about the progress of the initiatives, and not unilaterally waive or reduce the claim if it affects the exporter’s economic rights.

Preventive Agreements on Litigation and Cost Allocation

When reimbursement involves a lawsuit or structured legal action, the obstacles are organizational and financial: who decides if and when to proceed, who selects the lawyers, who pays the costs upfront, how the net recovery is divided, and who has the final say on a settlement. This generally applies to all contracts, not just this case: dispute resolution methods must be addressed and agreed upon before the problem arises.

Otherwise, the dispute resolution process risks becoming a secondary improvised negotiation at the worst time — when the parties are already under pressure from margins, cash flow, and regulatory uncertainty. As a result, it becomes much harder to reach an agreement.

How to handle new tariffs and their potential cancellation

To safeguard against uncertainty, the agreement should be organized into two stages.

• The first stage regulates the immediate impact of the change in scenario, for example, the introduction of a new tariff or its increase (renegotiation, cost sharing, automatic adjustment : I discussed this in this article).
• The second stage manages the possible « rollback » (right to reimbursement, process, allocation criteria).

This approach has a clear benefit: it does not force the parties to discuss every time the tariff regime changes or a decision to cancel tariffs is made. Instead of reacting to market changes, a tool is adopted to manage potential scenarios, which is much more resilient commercially and easier to oversee, as the rules have already been agreed upon.

This allows the impact of duties to be regulated not as an extraordinary variable, to be agreed upon on a one-time basis, but as a structural, adaptable phenomenon that could last a long time.

This is why it is crucial to know how to draft contracts that cover both the current situation and potential changes, including any refunds.

Conclusion: Three practical steps for companies exporting to the US

The first is to agree on the consequences for the contract of the introduction of a new duty, increasing it, or revoking it (renegotiation, cost sharing, automatic price adjustment, right to share the refund).

The second is to clearly document any discount granted to offset a duty. If it remains a generic « commercial discount, » the right to a refund if reimbursement occurs will be much harder to enforce.

The third step is to determine what happens if the duty is canceled or revoked: the importer’s responsibility to take action to get a refund, manage the administrative process or litigation, how to divide costs, who oversees the activities of consultants and lawyers, and how the recovered funds will be allocated.