If you fail to contract/extend, your striking limb will be flaccid and bounce-off.
There may be some risk of wrist injury.
If you exaggerate and tense-up, the strike will affect the opponent more but the strike will not penetrate.
Much of the force will feed back into you.
Most inexperienced people make a total mess of this and just tense-up. At that point, they are no longer training taijiquan.