The Tariff Effect: Rethinking Risk in a Fractured Trade Environment

How Tariffs Reshape Enterprise Risk

Tariffs rarely hit businesses in a straight line. Instead, they set off chain reactions that cross functions: supply chain, finance, legal, and risk management.

• A 25% duty on steel, for example, doesn’t just raise the cost of raw materials-it slows procurement, forces design changes, squeezes contractor margins, and delays delivery.
• A retaliatory tariff on pharmaceuticals might disrupt ingredient sourcing from a previously stable market, forcing emergency procurement or production shutdowns.

These scenarios introduce multiple layers of risk:

• Supply chain volatility: new vendors, longer lead times, quality control issues
• Marine cargo disruption: increased risk of port congestion, shipment rerouting, and delayed customs clearance
• Compliance gaps: shifting import/export regulations, customs misclassification
• Operational delays: contract penalties, service-level breaches
• Credit strain: delayed payments, defaults, receivables pressure

In short, tariffs ripple beyond the finance department. They test the organization’s ability to adapt across multiple dimensions of enterprise risk.

Credit Exposure Is Just the Beginning

Trade Credit Insurance (TCI) plays an essential role in tariff-linked credit protection. But TCI alone cannot absorb the broader shockwaves of supply chain and legal risk.

We’ve advised clients whose receivables were delayed not just due to a buyer’s solvency, but because of:

• Logistics bottlenecks at ports tied to trade disputes
• Payment held in escrow due to sanctions or export classification confusion
• A downstream subcontractor failure triggered by tariff-driven margin erosion
• Marine insurance claims for delayed or rerouted shipments caught in regulatory limbo

Credit risk cannot be isolated from the operational or legal context. That’s why EPIC brokers often begin with a Trade Credit Audit, but then expand the view to include:

• Buyer reliability screening in light of geopolitical shifts
• Scenario planning tied to upcoming election-driven trade policy changes
• Supply chain risk tiering to identify key single-point failures
• Review of marine cargo policies to ensure alignment with new trade lanes and port risks

Sector Spotlight: High-Risk Zones

Across EPIC’s client base, we see concentrated vulnerability in industries that rely heavily on cross-border inputs, long-tail production timelines, or multi-vendor ecosystems.

Construction

• Tariffs on steel, aluminum, and solar components can disrupt procurement schedules and trigger penalty clauses.
• Subcontractor solvency is strained when costs spike mid-contract.
• Change orders and renegotiations lead to credit and E&O claims.

Healthcare and Life Sciences

• API and medical device tariffs lead to input cost spikes and FDA resourcing challenges.
• Alternative sourcing from emerging markets introduces quality and regulatory risk.
• Clients are insuring not just AR, but also compliance-triggered delays and errors.

Technology and Electronics

• Chip shortages and digital trade controls are reshaping entire product timelines.
• Replacing suppliers in sanctioned countries introduces new contractual liabilities.
• Disputes over IP, licensing, or design specs are on the rise as firms rush to adapt.

Transportation and Logistics

• Retaliatory tariffs are changing preferred shipping lanes and customs exposure.
• Freight-forwarders are taking on greater contractual risk due to last-minute rerouting.
• Brokers must integrate credit protection with marine, cargo, cyber, and general liability

The Case for Integrated Risk Management

At EPIC, we work with clients to go beyond policy placement. In a tariff-sensitive world, protection must span departments, timelines, and geographies.

Our approach aligns:

• Trade Credit Insurance: still foundational for AR protection
• Marine Insurance: critical for protecting goods in transit amid changing global routes
• E&O Insurance: for delivery delays, documentation errors, contract risk
• Cyber Insurance: new vendors = new digital vulnerabilities
• Property & Casualty: warehousing changes and increased business interruption exposure
• Environmental Liability: new sourcing or materials leading to regulatory mismatch

In volatile conditions, the orchestration of these policies is not optional-it’s essential. When multiple risks hit simultaneously, only a coordinated approach allows clients to respond in real time without gaps.

Contracts, Claims & Complex Coverage

Tariffs are not inherently good or bad-they are simply a reality of international commerce. While their political and economic impacts are debated, their operational consequences are undeniable.

The companies best positioned to weather global trade volatility are those who treat risk management as a performance function, not just a safety net.

EPIC helps clients do more than insure against the downside. We help them use insurance as a strategic tool to stay agile, reliable, and ahead of disruption. In an interconnected world, the smartest companies aren’t those who can avoid risk altogether. They’re the ones who are ready for it, wherever it appears.