Aliya Daya, Senior Client Executive, shared with Canadian Underwriter ways that insurance and supply chain management can help clients navigate an escalating trade war.
On Feb. 1, US President Donald Trump followed through on his threat and imposed a 25% tariff on Canadian goods entering the United States. This will impact a wide range of industries. Canada said it will issue counter-tariffs on US goods in response, further escalating a trade war between the two countries.
While there is no insurance that specifically safeguards against tariffs, supply chain extensions on certain business interruption policies can help minimize the financial blow.
“It covers lost income or additional expenses due to delays or increased costs caused by trade action or tariffs. It can address things like disruption in material availability or increased overall increased cost. It’s very, very generalized.”
— Aliya Daya, Senior Account Executive, Acera Insurance
Localizing, diversifying supply chain can help protect against tariffs
Businesses should also reexamine their supply chain to help further offset the impact of tariffs. One recommendation Aliya provided is to source local materials, where possible.
“I have seen [insurers] offer premium discounts for such practices. Having a shorter supply chain is very beneficial for certain segments and industries. From a budgetary perspective, shorter supply chains are also more cost-effective. With longer supply chains, there are more links in that chain where something could potentially go wrong, causing a break.”
— Aliya Daya, Senior Client Executive, Acera Insurance
Having a diversified supply chain and exploring a contractual tariff pass-through clause were other recommendations she discussed for Canadian businesses looking to navigate Trump’s tariffs.
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