New US tariffs in the automotive industry: how to protect contracts and respond to rising costs?

Part I – B2B relations

New import tariffs introduced by the United States in April 2025 have caused considerable turmoil in the automotive market and fears of an escalation of the “tariff war.” The increase in customs duties to 25% on cars, light trucks and car parts imported from Europe, as well as additional “reciprocal tariffs” ranging from 10% to as much as 50%, pose a significant challenge for the automotive industry. The Polish automotive sector, which is closely integrated with global supply chains, is feeling these changes particularly strongly.

Although on April 9, the United States suspended tariffs for 90 days imposed on, inter alia, goods from the European Union, to which the European Commission responded on April 10 by suspending retaliatory tariffs, the geopolitical situation remains dynamic and highly uncertain. It is difficult to predict what trade relations between the US and the EU will look like after 8 July 2025, and whether the “ceasefire” will end before the declared deadline.

In this article, we explain how the new tariffs may affect existing agreements between Polish automotive companies and their business partners, and suggest some practical ways to protect your interests.

In the next section, we will present the impact of the new customs policy on automotive companies' contracts with consumers, particularly regarding after-sales services, including warranty services and repairs.

Impact of tariffs on costs and supply chains

A significant increase in import duties (e.g., 20-25%) leads to a sharp rise in the final price of products in the US. This may result in a decline in orders for cars manufactured by European companies and, consequently, for parts and components produced in Poland. Other likely consequences include pressure to lower net prices or the need to relocate production.

For entrepreneurs operating in Poland, this means not only an increase in costs, but also the need to reevaluate their existing export strategies, including searching for alternative markets or developing new distribution channels outside the US. The risk of exports to the United States becoming unprofitable and discrepancies between previously agreed prices and the actual cost structure has increased significantly. As a result, entrepreneurs are faced with a dilemma: renegotiate delivery terms or terminate cooperation with American customers.

Responsibility for customs duties and Incoterms

The basic factor determining which party to the contract will bear the burden of new customs duties is the agreed delivery formula, most often defined according to Incoterms. It is crucial whether the delivery formula obliges the seller to pay import duties or whether this obligation rests with the buyer.

For example, the DDP (Delivered Duty Paid) formula means that the seller assumes full responsibility for delivering the goods to the designated destination and undertakes to pay all customs duties, taxes and other import charges. In other words, with DDP, the seller pays the import duty and handles customs formalities, while the buyer receives the goods “net” without any additional customs charges on their side.

However, if the contract is based on EXW (Ex Works) or DAP (Delivered At Place) rules, the burden of customs duties is transferred to the importer (buyer).

In the context of the new tariffs, Polish exporters should therefore review their existing contracts in order to amend the terms of cooperation or change the delivery formula used, if necessary.

Price clauses and indexation mechanisms

In the event of a sudden increase in costs (e.g. due to customs duties), indexation clauses allow the price to be adjusted to the new situation. As a rule, they are based on objective indicators such as commodity price indices, exchange rates or customs duties. Freedom of contract (Article 3531 of the Civil Code) allows the parties to introduce flexible provisions that ensure balance between the parties despite changes in trade policy.

If the contract does not provide for a price adjustment mechanism, the financial risk lies entirely with the party obliged to deliver at a fixed rate. Attempts at informal negotiations may fail, and the only option then is to resort to extraordinary measures, such as a hardship clause (Latin: rebus sic stantibus) regulated in Article 3571 of the Polish Civil Code (the “PCC”).

Hardship clause

The abovementioned Article 3571 of the PCC requires that there be an extraordinary and unforeseeable change in circumstances causing excessive difficulties in the performance of the contract or the threat of a gross loss. If these conditions are met, the court may change the manner of performance of the contract, adjust the amount of the performance or, in extreme cases, decide to terminate the contract.

The Polish Supreme Court has ruled that a change in the legal status, which is an external event, independent of the will of the parties and impossible to predict at the time of conclusion of the contract, should be considered an extraordinary change in circumstances within the meaning of Article 3571 of the Civil Code if it significantly affects the situation not only of the debtor but also of the creditor. This also applies to a significant and unexpected change in tax rates [1].

Similarly, in the event of a sudden and significant increase in customs duties on goods covered by the contract, the contract should be modified based on Article 3571 of the PCC, in particular by changing the prices.

However, it should be remembered that the extraordinary change of circumstances clause can only be applied by a court, which means that legal action must be brought against the counterparty. In order to minimise the risk of incurring excessive costs of cooperation during a long-lasting court dispute, it may be considered to file a motion for securing the claim, e.g. by establishing new rules for settlements or deliveries for the duration of the proceedings.

Importantly, the above-mentioned provision may only be invoked in the case of contracts governed by Polish law.

Change of law clauses

Another mechanism similar to hardship, often used in long-term contracts, is change of law clauses. Such a clause (change of law clause) provides that in the event of a change in the law that affects the performance or costs of the contract, the parties will make appropriate arrangements for the further performance of the contract.

The parties may therefore agree that if customs duties increase above a certain level, an attempt will be made to amend the contract, and if this fails, the contract will be terminated.

In practice, such a provision could oblige the parties to commence negotiations within 14 days of the change in law and, if the talks fail, to establish a transparent procedure for terminating the contract, thus allowing both business partners to avoid long-term losses.

Force majeure and customs duties

Force majeure is an external event that is objectively unforeseeable and unavoidable.

If the contract contains a force majeure clause, the first step is to check whether changes in the law or decisions of public authorities are listed therein as cases of force majeure. Extensive force majeure clauses often include government acts, changes in law, import/export restrictions and others.

Therefore, an increase in customs duties may be considered a case of force majeure if the contractual clause so provides and if it makes it legally impossible to perform the contract.

If force majeure is not included in the contract, it will be difficult to invoke it. This is because Polish law does not define force majeure, and case law tends to interpret the concept narrowly.

The Polish Supreme Court ruled that in a situation where a party could have purchased the ordered goods on the market in order to perform its obligation but did not do so because it would have been unprofitable for it, it cannot be claimed that the partial performance of the contract was the result of force majeure (in this case, drought). It was emphasised that extraordinary events cannot be classified as force majeure solely on the grounds that they increase the costs of performing an obligation [2].

It is also doubtful whether it is possible to invoke the so-called subsequent impossibility of performance (Article 475 of the PCC). This concept was accepted until the introduction of the extraordinary change of circumstances clause into the PCC [3].

Termination clauses and right of withdrawal

Another form of security is the introduction of a termination condition or contractual right of withdrawal (Articles 89 and 395 of the Civil Code). For example, it may be stipulated that exceeding the customs threshold constitutes grounds for automatic termination of the contract or for unilateral withdrawal without liability for damages. It is important that the procedure and triggering thresholds are clearly defined.

Recommendations for entrepreneurs

When concluding new contracts and amending existing ones, Polish exporters should pay particular attention to:

1. Choosing the right delivery terms (Incoterms). A conscious decision should be made as to which party bears the customs costs (DDP vs. EXW/DAP).
2. Introducing indexation clauses. This avoids the risk of disputes and court intervention in the event of significant changes in the market environment.
3. Application of hardship or force majeure clauses. These may introduce an obligation to engage in amicable renegotiation, as well as automatically defined changes to the terms of cooperation or even termination of the contract in the event of extraordinary changes and difficulties.
4. Inclusion of a change of law clause. This protects against changes in customs or tax regulations and allows for flexible adaptation of contracts.
5. Possibility of termination/withdrawal. Exit clauses, such as a termination condition or a right of withdrawal, provide a “safety net” in the event of a radical increase in costs.

In the event of problems with a contract currently being performed, it is advisable to:

1. Carefully review the provisions of the contract in terms of applicable law, jurisdiction, and force majeure clauses.
2. Renegotiate the terms of cooperation. The expected changes should be thoroughly justified from an economic point of view.
3. Take legal action. Due to the duration and costs of court proceedings, this should be a last resort. However, if the situation requires it, it is worth starting with an application for securing the claim by obtaining an interim injunction.

Summary

The trade war imposed by the US poses a serious challenge to the Polish automotive sector, which is an important link in global supply chains. In order to protect against a sudden increase in customs duties, it is worth using a number of instruments provided for by Polish law in contracts: from indexation clauses, through rebus sic stantibus, to clauses on changes in law and contract termination mechanisms. This allows businesses to respond flexibly to dynamic changes in the environment, minimising the risk of significant losses and avoiding lengthy court disputes.

[1] See, e.g. judgments of the Supreme Court of 16 May 2007, file No. III CSK 452/06, 20 July 2007, file No. I CK 3/07 and 17 January 2008, file No. III CSK 202/07.

[2] See, e.g. judgment of the Supreme Court of 11 July 2019, file No. V CSK 155/18.

[3] See, e.g. judgment of the Court of Appeal in Szczecin of 4 June 2020, file No. I AGa 146/19.