Tariffs and refunds have been in the news a lot lately, and you’re probably wondering if you might get some cash back. This article breaks down eligibility and how these refunds could affect your contracts.
On August 25, 2025, the United States Supreme Court ruled that the tariffs imposed by the Trump administration under the International Emergency Economic Powers Act (IEEPA) were illegal. The Supreme Court ruled that the administration had exceeded its authority and was required to refund overpaid amounts.
On April 20, 2026, U.S. Customs and Border Protection (CBP) announced the new tariff refund system: the Consolidated Administration and Processing of Entries (CAPE). Under this system, those directly affected by the tariffs may file a claim. Refunds will generally be issued within 60 to 90 days of an accepted claim, though complex cases may take longer.
Now, companies impacted by the tariffs are working to determine their rights to refunds. Tariffs had a significant impact on construction materials, but those in the industry may be surprised to learn who is (and isn’t) eligible for refunds.
Where Tariff Refunds May Show Up in Construction Projects
Many construction materials, especially lumber and steel, often come from other countries. If you purchased materials from an international supply chain over the past year and a half, you likely noticed higher prices due to tariffs.
However, for most construction businesses and projects, tariff refunds won’t have an immediate impact. Tariff refund claims will only be approved for those who paid the tariffs directly. Material and equipment vendors closer to the import process may be able to recoup refunds.
Depending on individual business decisions, impending lawsuits, and general relationship management, the refunds may be shared with vendors and their customers. That means refunds could flow through the supply chain, providing some relief at the project level. This applies across the board: owners, GCs, and subs all felt the impact of higher prices and greater unpredictability. Owners and GCs carry the most budget responsibility, so they are the ones who would benefit most if refunds do trickle down.
Tariff Refunds and Construction: What Are They and Who Gets the Money
While the tariff impact was broadly felt, tariff refunds will only be available to companies that directly paid tariffs to CBP (typically the importers of record, a broker, etc.). Those companies get to decide how to use their refunds.
Are Construction Companies Eligible to Receive Refunds?
Most construction companies will not receive tariff refunds. Companies that purchased materials or equipment domestically are not entitled to receive tariff refunds directly, even if those materials or equipment became more expensive due to higher tariffs.
However, companies that directly paid tariffs for imported goods will be able to file a claim through the CAPE system. If approved, those companies should receive funds within a few months.
Here’s a quick reference to assess eligibility.
Situation | Refund Eligible? |
You purchased material from a U.S. supply yard that raised prices due to tariffs. |
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You purchased material from overseas, but you used a broker or other intermediary to handle the transaction and pay the tariffs/fees. |
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You directly imported materials and paid tariffs to CBP. |
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You used a broker but paid the tariffs to CBP yourself. |
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You’re likely not entitled to apply for a refund from the CBP.
You may be entitled to a refund.How Eligible Parties Can Use Tariff Refunds
Importers, brokers, and other eligible parties currently have no restrictions on how they use their refunds. It’s at the company’s discretion. They may opt to share the refund with their customers who shouldered some of those higher prices, but they are not currently legally required to.
However, the landscape continues to shift, and lawsuits have already been filed to claim these potential refunds.
Are Tariffs or Tariff Refunds Contemplated in Construction Contracts?
Tariffs have a major impact on construction materials, and construction material prices factor into the cost of the project. Construction contracts typically address tariff impacts by designating which party is responsible for taxes, fees, or similar costs. However, it’s uncommon for a construction contract to specifically address tariffs or refunds.
This approach makes sense. The current tariff climate is unprecedented, and tariffs being struck down by courts and refunded are even rarer. Still, there are implications for construction contracts.
Regardless of whether tariff concerns appear in the contract language, they will affect the project.
For example, the sudden jump in tariff costs significantly impacted projects priced before the tariffs took effect. The increases created uncertainty when calculating bids for planned projects. Cost Plus jobs saw price increases, and those whose pay was tied to material costs could see a benefit.
For jobs with a Guaranteed Maximum Price (GMP), unexpected tariffs could cause the project to reach the maximum price faster than expected, affecting profitability or even the job’s viability. In jobs without a GMP, the owner assumes the risk.
Stipulated Sum projects probably face the most difficulty given the lack of flexibility, though an unexpected cost, like tariffs, is a good reason to revisit the agreement.
How Tariff Refunds Could Indirectly Affect Your Contracts
Tariffs or tariff refunds could affect your contracts in several ways. Below are a few examples. This is not a complete list, and the information does not constitute any legal opinion by AIA Contract Documents. For legal advice regarding your contracts, consult with an attorney.
A102 and A103 Owner-Contractor Agreements
Article 7 of the A102™ – Agreement Between Owner and Contractor for Cost of Work Plus a Fee With a Guaranteed Maximum Price contains provisions about reimbursement of expenses. Section 7.6.2 states that “Sales, use, or similar taxes, imposed by a governmental authority…” are reimbursable. Those who faced higher material or equipment prices due to tariffs might be entitled to bill for it.
However, a tariff refund could also trigger Article 9, which states, in part, that “Trade discounts, rebates, refunds, and amounts received from sales of surplus materials and equipment shall accrue to the Owner, and the Contractor shall make provisions so that they can be obtained.”
A103™ – Agreement Between Owner and Contractor for Cost of Work Plus a Fee Without a Guaranteed Maximum Price has the same language.
A201 General Conditions
Section 3.6 of A201® – General Conditions of the Contract for Construction states that the Contractor shall pay “…sales, consumer, use and similar taxes for the Work provided by the Contractor that are legally enacted when bids are received or negotiations concluded, whether or not yet effective or merely scheduled to go into effect.”
There are several potential implications here, but the removal of IEEPA tariffs could lead to savings if anticipated costs go down.
A133 CMc Agreements
For any agreement where someone’s pay is determined as a percentage of the project (such as A133™), a jump in material prices due to tariffs could greatly impact the price and their fee. Similar to the A102, that calculation could be complicated if tariff refunds are received for project materials.
Other provisions under Article 6 account for changes in the work and provide opportunities for parties to designate how to adjust pricing. Depending on how the contract was drafted, tariffs may trigger a change in the work.
Finally, Article 8 of the agreement contains terms similar to those in A102 and A103. If tariff cancellations or refunds impacted the project, there may be some relief available.
A312 Payment and Performance Bonds
A312™ Payment and Performance bonds generally correspond to the project cost. If costs rise after bonds are secured, that could lead to exposure. Tariffs being struck should help to close any gaps.
For contractors securing bonds, lower tariffs and potential refunds should mean a more stable market and greater profit margins, which could help with bond capacity.
Allowances
When materials are more expensive due to tariffs, that eats into allowances. The removal of those overextended tariffs should provide some relief. And if the refunds flow down far enough, they could help create some breathing room in the budget.
Contingencies
Tariffs cut into the project contingencies, as well. If refunds become available, contingencies could open up.
Alternates
The removal of these tariffs or their potential refunds shouldn’t affect alternates much. But if prices drop, you may not have to worry about costs as much. Refunds could also put more money back into the project, allowing for higher-quality alternates.
Savings
If you’re working on a GMP project, a tariff refund could boost savings and increase margin. If you’re working on a project that was priced and bid when tariffs were higher, the refund could provide an immediate benefit.
These are just some of the ways construction contracts might be impacted by the current tariff and tariff refund landscape. Many variables could impact your specific situation. If you have questions about how your projects might be affected, you should consult an attorney.
Key Takeaways
Ultimately, tariffs have a major impact on construction costs, and most in the construction industry will not be eligible for direct tariff refunds (unless you’re the one who actually paid the tariff to the CBP).
So far, it appears that businesses receiving refunds will have some flexibility in how they use the funds; some may share refunds with customers. We also expect some litigation on refund distribution, and those outcomes will shape how these funds move through the industry. In the meantime, it might be worth it to review your contracts with your suppliers to see if you have any previous terms that could help to recapture some cost.
Even if refunds aren’t passed along, a return to lower tariff rates would benefit construction businesses, design professionals, and owners alike.
Ready to consider your next project? Here are the 5 key terms that should be in every construction contract.
