How AI-Powered Contract Intelligence Helps Manufacturers Respond to Tariff Shocks

When new tariffs are announced manufacturers don’t just face higher costs. They face critical questions: Can we pass these costs on? Do we have alternatives in place? Are our suppliers contractually obligated to maintain pricing? Can we renegotiate or even exit unfavorable terms?

Manufacturers are particularly exposed to tariff impacts because of their heavy reliance on globally sourced materials and components. A single finished product may depend on dozens of suppliers across multiple countries, each governed by its own contractual terms. Tariffs can introduce sudden and substantial cost increases that ripple across the entire bill of materials, affecting both margins and delivery timelines.

The answers to those questions often lie in your contracts.

Contracts, when interpreted correctly, can offer companies much-needed relief in times of disruption. Contract provisions that may come into play include price adjustment clauses, termination for convenience, sourcing flexibility provisions, and international commercial terms (Incoterms) — which define the responsibilities of buyers and sellers in cross-border transactions. In some cases, force majeure may even apply. But “having the clause” and “being able to act on it” are two different things. Organization needs to be able to quickly analyze these documents and then operationalize their intent.

That’s where technology comes in.

Turning Contract Language into Business Leverage

At Icertis, we help manufacturers go beyond contract management and into what we call contract intelligence. Our platform uses artificial intelligence to structure and analyze contract data across your enterprise, enabling faster decisions and greater agility in the face of disruptions like tariffs.

This kind of insight can mean the difference between a proactive renegotiation and a margin hit you didn’t see coming.

Let’s say a tariff hits your primary raw material. With traditional contract systems—or worse, file shares and binders—it could take weeks to manually sift through supplier contracts to find out which suppliers may be affected and whether there is recourse embedded in the contract. But with Icertis, organizations can use AI to search their supplier contracts against contract data like supplier location (to determine if tariffs apply) and contract language that may have bearing (price adjustments, incoterms, etc.).

This kind of insight can mean the difference between a proactive renegotiation and a margin hit you didn’t see coming.

Actionable Insights, Not Just Storage

Here are a few ways manufacturers are using Icertis to respond to today’s volatile trade and tariff environment:

• Rapid Impact Assessment: Quickly identify all contracts potentially affected by new tariffs and assess which terms—pricing, delivery, obligations—need to be reviewed.
• Negotiation Readiness: Access AI-generated clause comparisons to evaluate which suppliers offer the most flexibility under tariff pressure, informing future sourcing decisions.
• Obligation Management: Track and enforce compliance with tariff-related obligations—whether it's passing on surcharges, applying escalator clauses, or exercising termination rights.
• Prevention Through Better Drafting: Author smarter contracts with pre-approved language that explicitly includes tariffs and trade actions, reducing ambiguity when it matters most.
• Intent Realization: Ensuring Pricing and SLA commitments agreed to by suppliers in contracts are achieved operationally in purchase orders and invoices. To ensure negotiated pricing incentives, promotions, rebates, and other cost protections are enforced to help mitigate pricing volatility.

Resilience Starts in the Contract

Contracts are more than just legal documents. They’re operational tools that determine how well you can respond to market shifts, regulatory changes, and economic shocks. But to be useful, they must be accessible, intelligible, and actionable.

That’s what Icertis enables.

In a global manufacturing landscape marked by complexity and change, contract intelligence isn’t a “nice to have.” It’s a strategic imperative. If your company is navigating tariff risks—or simply wants to be ready for the next unexpected disruption—let’s talk about how we can turn your contracts into a source of insight, efficiency, and resilience.