The trade war between the US and Canada is a stark reminder of how manufacturers north of the 49th parallel are increasingly vulnerable to risks that originate beyond our borders.
Canadian manufacturers’ operations can suddenly be knocked down when international supply chains are disrupted from the likes of geopolitical tensions, extreme weather and currency volatility.
The fallout from this domino effect may be unavoidable. But with enhanced protection, Canadian manufacturers can right their business and get back on track.
Before exploring the benefits of two key coverages (contingent business interruption insurance and trade credit insurance), let’s first take a moment to understand three key risks that manufacturers face when navigating the international supply chain.
International risks hit close to home for Canadian manufacturers
Physical property damage, equipment failures and liability have long been the hallmark coverages offered through an insurance program for manufacturers.
But as the industry relies heavily on global two-way trade, expanded coverage is critical.
Given today’s interconnected and volatile supply chain, manufacturers need to account for the following risks that are more indirect but no less disruptive to their business.
How global climate change affects Canadian manufacturers
From wildfires to floods, hurricanes to earthquakes, extreme weather is increasing in frequency and severity around the world.
As wildfires in California, hurricanes in the southeastern US and flooding in central China in recent years have demonstrated, climate change can suddenly damage supplier facilities and key transportation routes. This in turn interrupts the delivery of goods and services, and drives up costs for raw goods.
How geopolitical tensions affect Canadian manufacturers
Political uncertainty and upheaval hit supply chains hard by reducing — or pausing — the flow of goods, increasing trade costs and contributing to workforce cuts.
For example, following Russia’s invasion of Ukraine, Canada introduced trade sanctions that significantly decreased or outright banned the import of certain Russian materials.
US tariffs on Canadian goods, on the other hand, have prompted multi-billion-dollar project delays in the Canadian automotive sector. The trade war has also been credited with contributing to the Canadian manufacturing sector cutting 31,000 jobs in April 2025.
How global currency volatility impacts Canadian manufacturers
The sudden drop in foreign currency — such as what happened during the Argentinean monetary crisis — can leave Canadian manufacturing exporters grappling with lower profits and pricing challenges.
Essential insurance coverage for globally connected manufacturers
As outlined above, Canadian manufacturers who deal with any sort of product or service beyond our borders must consider international challenges and tensions when insuring their business.
This is where two specialized insurance coverages come into play.
Contingent business interruption insurance
Contingent business interruption insurance is hugely important for Canadian manufacturers who rely on key suppliers.
Your output — and the longevity of your business — depends on the reliability of materials needed to manufacture your product.
But, as evident in the above examples, international trade is anything but reliable.
A typhoon in Asia may not cause physical damage to your property. But the storm can quickly bring your operations to a halt if the factory of a key supplier is damaged.
This is when contingent business interruption insurance would kick in.
What does contingent business interruption insurance cover?
Contingent business interruption insurance responds when a supplier or customer suffers physical damage from a covered event, in turn impacting your operations because you’re unable to import the materials you need or export your products.
This is different from business interruption insurance, which would kick in when your business experiences a direct loss — such as property damage or theft.
What protection does contingent business interruption insurance offer?
Contingent business interruption can help you cover lost income and extra expenses resulting from disruptions at your supplier’s or customer’s location.
Trade credit insurance
International trade is a cornerstone of the Canadian economy, with nearly two-thirds of Canadian goods and services exported internationally.
The success of your business depends on getting paid for the goods or services you manufacture for your global clientele.
But what happens when they can’t pay due to insolvency, currency volatility or political risks?
Trade credit insurance can ensure that these unpaid debts don’t leave you in the red.
What does trade credit insurance cover?
Trade credit insurance covers financial losses stemming from unpaid invoices, ranging from late payments, bad debts arising from insolvency and certain political events, including sanctions.
It’s important to note, however, that trade credit insurance does not cover losses related to tariffs. (Learn more about how to protect your company from tariffs).
What protection does trade credit insurance offer?
Trade credit insurance can cover the amount of the unpaid invoice, helping to protect your cashflow stability.
Protecting Canadian manufacturers from global supply chain challenges
Global events — wars, sanctions, economic collapse, extreme weather — may seem distant.
But the domino effect triggered by such events can ultimately hit close to home, disrupting the production and delivery of goods manufactured in Canada.
Canadian manufacturers trade with the world, so protection from international risks cannot be overlooked.
Jen Warman is a Senior Client Executive at Acera Insurance. With more than 14 years of experience in the insurance industry, Jen specializes in supporting manufacturing companies, contractors and businesses with complex risk profiles. Licenced in both British Columbia and Alberta, she is well-positioned to serve clients across Western Canada. Her mission is simple: to make insurance easy to understand and even easier to manage. Jen takes pride in being a strong advocate for her clients — negotiating the best terms, offering clear advice and delivering a consistently exceptional experience. Whether your business is navigating risk management or looking for a more strategic insurance partner, Jen is committed to helping you thrive. You can connect with Jen at jen.warman@acera.ca or 403.824.2905.
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