Global trade tensions are nothing new, but for today’s businesses, shifting tariffs can send a ripple effect through supply chains, balance sheets, and even insurance premiums. From raw material price hikes to delays in production, the shockwaves of tariffs are wider and more financially damaging than many expect. The good news? With the right protection in place, businesses can prepare, respond, and even turn disruption into an opportunity for resilience.

1. What Are Tariffs and How Do They Impact Businesses?
2. How Do Tariffs Create Broader Financial and Operational Risks?
3. What Types of Commercial Insurance Can Help Mitigate Tariff-Related Losses?
   
4. How Can Businesses Proactively Reduce Their Exposure to Tariffs?
5. What Steps Should Businesses Take When Reviewing Their Insurance Coverage?
6. Safeguarding Your Business From the Unforeseen Costs of Global Trade

What Are Tariffs and How Do They Impact Businesses?

Tariffs are taxes imposed on imported goods by a country’s government. While they are often used to boost domestic industries or leverage foreign policy, they can also come at a cost—especially for companies that depend on global suppliers. 

Increased tariffs on raw materials or components can:

• Raise production and transportation costs
• Disrupt inventory availability 
• Force companies to alter supplier contracts or product designs
• Strain customer relationships with potential delays or price increases

For businesses relying on just-in-time inventory or offshore vendors, the impact can be drastic and expensive.

How Do Tariffs Create Broader Financial and Operational Risks?

Tariff changes often happen quickly, leaving companies with little time to adapt and prepare. Because many supply chains are global, even a small policy change can affect multiple links at once. 

Here are a few of the ripple effects that can shake your operations and bottom line:

• Increased repair and replacement costs: Tariffs on steel, lumber, or electronic components can drive up the cost of construction materials and vehicle parts. 
• Higher insurance premiums: Carriers sometimes raise rates to offset growing cost of claims. Also, increase in prices to protect to customers can increase exposures that policies are based upon.
• Greater exposure to underinsurance: Rising costs can outpace coverage limits, leaving businesses vulnerable during a claim.
• Market volatility and underwriting changes: Tighter policies, increased deductibles, or pulling back on coverage altogether are possible responses from some insurers.

What Types of Commercial Insurance Can Help Mitigate Tariff-Related Losses?

While there’s obviously no policy that can prevent tariffs and its effects, several types of commercial insurance can provide a financial buffer against the risks that result from them. 

Consider the following coverages:

• Commercial Property Insurance: Helps offset the rising cost of repairs or replacement for buildings and equipment. 
• Commercial Auto Insurance: Essential when replacement parts for vehicles are delayed or more expensive due to tariffs.
• Ocean Cargo Insurance: Covers goods in transit across international waters. It helps protect against loss, damage, or costly delays caused by disruptions during import and export. 

Regardless of the situation, there are specialized coverages out there for you that protects against the specific and unique risks of your business operations.

How Can Businesses Proactively Reduce Their Exposure to Tariffs?

Insurance is crucial—but it’s just one piece of a smart tariff risk management agenda. Businesses must also adjust their operations and sourcing strategies. 

Production can be moved closer to home. Nearshoring or reshoring helps limit reliance on high-tariff regions and can reduce shipping delays. Similarly, operating in foreign-trade zones (FTZs) allows companies to defer or reduce tariffs on certain imported goods.

Other steps include using AI for greater supply chain visibility, building out contingency plans, and adding cost-sharing clauses to contracts. These proactive measures not only build resilience but may also help lower insurance premiums when these efforts are clearly documented.

What Steps Should Businesses Take When Reviewing Their Insurance Coverage?

To ensure your business is protected from the full scope of tariffs, reviewing your coverage regularly is essential. 

Here’s what to do:

• Schedule a policy audit 
• Identify any existing gaps in coverage
• Update coverage limits if asset values or material costs have risen
• Ask about specialized policies like Trade Credit Insurance or contingent business interruption
• Document your risk management efforts

Working with a knowledgeable insurance provider like our dedicated team at Biscayne Risk can be the difference between a manageable setback and a business-threatening loss.

Safeguarding Your Business From the Unforeseen Costs of Global Trade

Although tariffs may be a policy decision made in the capital, their impact hits local operations fast. With a smart mix of operational strategies and customized commercial insurance plans, your business can stay one step ahead even in a volatile trade landscape. 

Ready to review your exposure and build a plan that safeguards your business? Contact Biscayne Risk today for a personalized coverage consultation.