Schjødt establishes a Tariff Team to guide businesses in tariff-impacted markets

Developments happen rapidly and affect the markets in different countries in various ways. Our dedicated full-service response teams in Norway, Sweden, and Denmark are available at to discuss any challenges businesses face.

Sweden: Fredrik Linder (fredrik.linder@schjodt.com) +46 70 304 40 05
Denmark: Søren Hilbert (soren.hilbert@schjodt.com) +45 29 29 03 93
Norway: Thomas Nordby (thomas.nordby@schjodt.com) +47 901 68 150

Some key legal areas and themes covered by our Tariff Team are listed below:

Tariffs may directly impact supply lines and preparedness in the defence sector, which underlines the importance of national self-sufficiency and robust cooperation between European countries.

• The need for self-sufficiency is further increased: US firms are important suppliers to the defense sector, and the US market is important for Scandinavian suppliers. The change in the political environment has already led to great focus on self-sufficiency strategies within Europe. Suppliers should to a larger extent focus on being able to deliver to the home markets and to rely less on US supply lines.
   
• Increased need for direct contract awards: The development further strengthens the urge for European governments to conduct defence procurements under the EU Treaty, section 346, without tender procedures. Suppliers should be ready to seek and negotiate such directly awarded public defence contracts.
   
• Support for collaboration programs will decline: The tariffs and uncertainty are likely to impact collaboration projects such as the Joint Strike Fighter collaboration. Subcontractors under such programs should follow that development and be able to prepare for a possible change in the support for such programs.

European companies largely rely on international tech services, with the US being an important tech trading partner. The new tariffs create uncertainty among European companies and may give momentum to investment in a stronger European tech infrastructure.

• Review and amend contracts with US tech services providers: Most private companies in Europe utilize one or more US tech service suppliers in one way or another. The EU has indicated that an adequate response to the new tariffs may include that EU will target digital services provided by US tech companies like Google, Amazon, Meta, Apple, and Microsoft. US tech companies will try to push these increased costs onto their European customers. European companies should consider reviewing and, if possible, renegotiating existing contracts. 
   
• US tariffs on data center hardware may induce more investments in Europe: New tariffs on data center hardware may induce more hardware investments in Europe. Even though the new tariffs currently exempt semiconductors imported from Taiwan, the uncertainty may induce a shift for EU companies to increase spending and building in Europe, including new data centers.
   
• On-premises versus cloud: Tariffs have revived interest in on-premises infrastructure, particularly for industries handling sensitive data. A cost analysis by Siemens revealed that a 20% tariff on Azure services made on-premises storage 12% cheaper over five years, despite higher upfront costs. European companies should consider sufficient on-premises data backup in addition to their current reliance on cloud storage.

The imposition of tariffs can lead to disputes over contract terms, particularly with regards to pricing and delivery obligations. Businesses must carefully review and potentially renegotiate contracts to mitigate risks.

• Tariffs will impact existing contracts: Businesses should closely review their contracts to determine which party bears the burden of newly imposed tariffs, and whether the contracts contain mechanism that allow price adjustments due to cost increases. 
   
• Renegotiation needs in light of unforeseen cost increases: If tariff increases lead to significant, unforeseen cost hikes, companies should assess whether the original contract terms remain economically sustainable or require adjustment. In cases of substantial cost pressure, initiating dialogue with the counterparty may be both commercially and legally prudent.  
   
• Risk management and recommendations for future contracts: Future contracts should include specific provisions for adjusting prices if tariffs or similar government charges are introduced. This ensures predictability and fairness in long-term agreements. Consider including a general “change of law” clause that explicitly covers newly imposed tariffs and consider including currency adjustment clauses or linking prices to an index to hedge against both tariff-related and exchange rate volatility.

Tariffs influence the conditions on which public authorities procure goods and services, which brings about new challenges and opportunities. Fluctuations in price, supply and demand may make it necessary for public authorities to reassess their procurement strategies and to revise existing contracts.

• International relations affect procurement priorities: When international relations become uncertain, public entities prioritize self-sufficiency to a larger degree, which tends to favour local and national suppliers. The need for national security may also represent a shift in what goods and services are procured on the marked, thus rewarding suppliers that are able to provide according to new requirements.
   
• Tariffs impact procurement criteria: Developments in the market may incentivize public entities to think differently when formulating minimum requirements and evaluation criteria in procurements, especially with regards to security of supply. Suppliers must pay close attention to the criteria that are used in a procurement procedure and ensure that the tender fulfils all the needs of the public entity.
   
• The need for modification of public contracts: Public authorities are subject to stringent rules on when a public contract may be modified, which are harmonized between all EU and EEA Member States. Although there are possibilities to alter public contracts with regards to market developments, there may be legal uncertainty regarding how substantial the modifications may be. Legal representation may be necessary to have amendments greenlit by public authorities.

Tariffs may affect the financial and operational situation of companies, potentially requiring reorganization processes, including both dismissals and temporary layoffs.

• Workforce reductions: The imposition of tariffs may lead to a reduced activity level, including a decrease in revenue, sales, and customers, and thereby create a challenging financial and operational situation for companies. This may require cost reductions to keep the company at a healthy level, also including workforce reductions if other less drastic measures are not sufficient and the development is not expected to change in the foreseeable future. The rules on temporary layoffs regularly are subject to change, and there may also be specific rules applicable to certain business sectors, specifically in the fish industry in Norway.
   
• Temporary layoffs: Employers should, if the challenging financial and operational situation is regarded to be of a temporary nature, consider temporary layoffs as an alternative. The legal basis for temporary layoffs, is that there is a temporary lack of work that is caused by circumstances the company could not influence or overcome the consequences of.
   
• Management prerogative: A difficult financial and operational situation may also require other changes in the employees' working conditions. According to the management prerogative an employer has the right to organize, manage and distribute the work within the scope of the employment relationship entered into. The employer can unilaterally make such changes subject to the management prerogative that are not limited by legislation, applicable collective bargaining agreement, individual employment agreements and / or other legal basis.