On April 2, 2025, Executive Order No. 14257, issued by the President of the United States of America [“U.S.”] Donald J. Trump [“Order No. 14257”], “ Regulatıng Imports Wıth A Recıprocal Tarıff To Rectıfy Trade Practıces That Contrıbute To Large And Persıstent Annual Unıted States Goods Trade Defıcıts,” introduced new “reciprocity-based” tariffs against the United States’ trading partners.
In this context, an additional 10% ad valorem duty was imposed on all imports, while imports from certain countries were subject to tariffs ranging from 11% to 50%. Since its publication, Order 14257 has been on the agenda of many economists, heads of state and trade actors. Especially for Turkish companies that have direct or indirect commercial relations with the US, it has become a thought-provoking situation in terms of costs and operational procedures for the fulfillment of existing contracts. Companies are entering a phase where they will first try to understand the current circumstances and then discuss whether this is a situation that they should now embrace in their commercial relations or whether it requires a complete reassessment of their commercial ties.
The Impact of New Customs Duties on Exporters and Supply Chains in Turkiye
The sectors that will be most affected by the new US tariffs include automotive, electronics, metals and industrial components. All of these sectors represent critical export segments for Turkiye. Around 68% of Turkish exports are destined for these free trade agreements and EU markets. This makes the Turkish economy highly vulnerable to disruptions in global supply chains, especially those passing through the EU. Indirect exposure to US tariffs on EU-origin goods can also significantly affect Turkish companies that participate in regional value chains or serve as suppliers to European producers. From time to time, different tariffs and duties arising from trade relations between countries have been introduced and have existed for a long time. However, what makes the situation here different is that it arose unpredictably (which is, of course, a separate discussion) and created a situation that could lead to a sudden imbalance in trade between the parties.
Order 14257 itself does not clarify this sudden imbalance. For example, Section 2 states that “These additional ad valorem duties shall apply until such time as I determine that the underlying conditions described above are satisfied, resolved, or mitigated.” In other words, these additional taxes, which were introduced by Order 14257 on an indefinite date, may be abolished at any time based on a subjective assessment, rather than being subject to an objective assessment.
Takahide Kiuchi, managing economist at Nomura Research Institute, also drew attention to this problem, “ Trump’s tariffs carry the risk of destroying the global free trade order the United States itself has spear-headed since the Second World War,” regarding Order 14257.[1] On the other hand, from Turkiye’s perspective, some economists and businesspeople believe that US tariffs could strengthen the dollar and put pressure on emerging currencies such as the Turkish lira, exchange rate fluctuations could indirectly affect Turkiye’s foreign trade, and disruptions in global supply chains could make Turkiye’s imports of raw materials and intermediate goods more expensive.
Considering all these assessments, the question arises as to whether these developments constitute a situation of unforeseeability for Turkish companies under Art. 138 TCO in terms of the international agreements to which they are a party. In the event that it is concluded that there is no unforeseeability, it requires that external interventions of this scale be evaluated within the scope of ordinary commercial risks, which is open to debate as to how realistic this approach is.
Unpredictability in Today’s Global Economy
With everything changing, what is truly unpredictable? Can US President Donald Trump’s Executive Order No 14257 be considered unpredictable? States can change their policies at any time, especially in the wake of left-right party changes and presidential changes. Of course, many companies that are commercial actors of states in the international arena are directly affected by these changes. Change is always possible and is considered a commercial risk. Here, however, Order 14257 has created a situation that affects many areas of a commercial company at the same time. Longer delivery times due to new customs procedures and changes in documentation requirements; pressure to renegotiate from US buyers or suppliers seeking to pass on newly imposed costs; disruptions in payment flows or requests for adjustments because import cost structures are no longer in line with agreed terms. Are companies indirectly allocating the risk of trade wars in their contracts?
In many cases, the legal implications may extend beyond the immediate financial consequences. For example, existing contracts without robust renegotiation, hardship or force majeure clauses may weaken under the pressure of these new measures. Although commercial actors may “anticipate” this and include force majeure clauses in their collaborations, there is no clear answer as to whether this is a force majeure event, i.e. a situation that unpredictably disturbs the balance of performance of the parties and causes an undue hardship.
Whether such global economic developments can be characterized as “unforeseeable events” under Turkish law, particularly Article 138 of the TCO, remains an open and topical question for jurists.
Article 138 TCO: A remedy for the unforeseen?
Although the basic principle of contract law is fidelity, extraordinary and unforeseen developments that occur after the conclusion of the contract may severely disrupt the balance of performance between the parties. Especially in continuous debt relations, if such sudden changes cause one party to suffer excessive damage and lose the balance at the time of the conclusion of the contract, the adaptation of the contract, i.e. changes in the rights and obligations of the parties, may be brought to the agenda by mentioning that the basis of the transaction has collapsed.
In this context, Turkish companies operating in the international arena or foreign companies working with a Turkish company; businesses with strict delivery, pricing or performance obligations; may be asking the following questions: Could the newly imposed customs duties trigger hardship or force majeure provisions? Can the parties renegotiate contracts that have become economically unstable? In many cases, in fact, it requires that the event not only makes performance more costly, but also impossible. If there are provisions, it is possible for parties to request renegotiation if performance becomes unduly burdensome.
In Turkish law, Article 138 of the Turkish Code of Obligations provides a way out for parties whose contractual obligations become excessively onerous due to extraordinary and unforeseeable events. This provision speaks of circumstances that upset the balance of the contract so severely that if the debtor had foreseen these circumstances, he would not have agreed to the same terms. However, in the context of cross-border commercial contracts, the question arises as to what qualifies as “extraordinary” or “unforeseeable”, especially if the disruption is not caused by war, natural disaster or epidemic, but by the trade policy of a foreign government.
Is the Transaction Foundation Really Collapsing?
The recent US tariff increases have further complicated international transactions. Turkish companies that have relied on stable, long-term supply agreements with their US partners may now face unexpected cost increases or operational impasses. Can such state-imposed trade barriers, introduced long after the signing of the contract, be considered extraordinary events as envisaged in Article 138? Or should such developments be considered part of the commercial risk that every prudent trader should anticipate in a volatile global economy?
Especially in international commercial agreements, parties are expected to assume a certain level of economic and political risk. At the same time, however, Article 138 of the TCO is designed for situations where the foundation of the contract/transaction begins to be shaken. Pursuant to Article 138 of the TCO, if an extraordinary circumstance, which was not foreseen by the parties at the time of the conclusion of the contract and was not expected to be foreseen, arises subsequently for reasons not attributable to the debtor, and this circumstance aggravates the performance of the contract in a way that is contrary to the rule of good faith for the debtor; the debtor may request the judge to adapt the contract to the new conditions. If adaptation is not possible, the right to rescind the contract (termination in continuous performance contracts) comes to the fore. This protection applies to all debt relations, including foreign currency debts.
According to the Court of Cassation[2] , four basic conditions must be met for this provision to be applicable: i. The extraordinary circumstance must arise after the conclusion of the contract and without the fault of the debtor, ii. This development must aggravate the performance to the extent that it violates the rule of good faith against the debtor iii. The debtor either has not yet performed or iv. has performed with its reserved rights. If all these conditions are met, it may be possible to reshape the contract according to the new conditions with the intervention of the judge.[3] However, the following questions still await an answer: Can developments such as trade wars, government policies and foreign currency-based cost increases be considered within the scope of this “extraordinary circumstance”? Or are these commercial risks that contracting parties should have anticipated?
Although the principle of unforeseeability in contracts provides a guarantee to the parties within the scope of Article 138 of the TCO, it is controversial in practice which events fall within this scope. For example, in some of its decisions, the Court of Cassation[4] did not even consider a civil war in a country within the scope of force majeure or unforeseeability. In another decision[5] , the embargo imposed on a company with which a company has a contractual relationship was evaluated within the scope of Article 138 of the TCO; however, since the embargo entered into force after the debtor’s default, the economic sanction in question was not accepted as an obstacle to performance or a ground for adaptation.
In this approach, the manner in which the event occurs is as determinative as whether the event could have been foreseen at the time of the conclusion of the contract. If, at the time the contract is concluded, the party is in a position to foresee an existing or emerging risk, it is deemed to have assumed that risk.[6] In this context, the question arises whether customs tariffs, import restrictions or geopolitical risks, which change frequently on a global scale today, should be considered as a natural extension of commercial life or unforeseeable extraordinary events. The state of emergency condition required for the adaptation of the contract may also cover economic and legal regulations. Macro-level developments such as economic crisis, serious fluctuations in the value of money, general unemployment, large-scale bank failures, stock market crashes and the introduction of new taxes are considered to be within the scope of the state of emergency. In particular, sudden changes in tax legislation may significantly shake the balance of performance between the parties in international commercial relations. If such regulations fundamentally change the economic assumptions at the time of the conclusion of the contract, they may be among the events that may lead to the collapse of the basis of the transaction. [7]
Our assessments
The fact that economic developments such as sudden exchange rate changes, new relations between the state, new customs duties, etc. cannot be fully foreseen in advance, even by technical experts; whether such events can be considered unforeseeable for the contracting parties, and whether new tax and tariff applications that lead to serious cost increases or performance imbalances create a shaking of the basis of the contract within the scope of Article 138 of the TCO should be carefully evaluated. Considering that even an extraordinary situation affecting only the parties to the contract may be deemed sufficient for adaptation, if the condition of unforeseeability has been met and a serious imbalance has occurred between the performances of the parties, there will be no obstacle to the evaluation of the Order No. 14257 within the scope of Article 138 of the TCO.
[1] https://tr.euronews.com/business/2025/04/03/ticaret-savaslari-20-trumpin-gumruk-vergileri-turkiye-ve-dunya-duzenini-nasil-etkileyecek - Last access to the website: 12.05.2025; https://www.reuters.com/markets/trump-tariffs-pile-stress-ailing-world-economy-2025-04-02/ - Last Access to the website: 13.05.2025
[2] Court of Cassation 11th HD., E. 2021/7877 K. 2023/2131 T. 6.4.2023 ; Court of Cassation 3rd HD., E. 2023/3741 K. 2024/1584 T. 8.5.2024
[3] Baysal, B.: Sözleşmenin Uyarlanması, BK m. 138-Aşırı İfa Güçlüğü, Istanbul 2017
[4] Court of Cassation, E. 2019/58 K. 2022/40 T. 25.1.2022
[5] Court of Cassation 46th HD, E. 2023/4244 K. 2024/202 T. 17.1.2024
[6] Görmez, Mustafa. Konut ve Çatılı İşyeri Kira Sözleşmelerinde Kira Bedelinin Belirlenmesi ve Uyarlanması. On İki Levha Publishing, 2019.
[7] İmamoğlu, Başak Şit. “Yabancı Para Üzerinden Sözleşme Akdetme Özgürlüğünün Sınırlandırılmasına İlişkin 12 Eylül 2018 Tarihli Cumhurbaşkanı Kararı Hakkında Bir Değerlendirme.” Journal of Banking and Commercial Law, vol. 34, 2018, pp.
By Deniz Buyuksengun, Senior Counsel, and Aden Guler, Associate, Guleryuz Partners