The Equities market has temporarily found relief from a terrible policy position in Tariffs.
The Trump administration announced a temporary pause on reciprocal tariffs. Excluding of course the only one that really matters, China. In fact, Chinese tariffs have now (or will go) up to 125%. Which means anything you buy at the largest employer in the world, Walmart, will likely be out of stock in a few weeks.
I outlined this in a recent article with Zag Daily in how this matter impacts the Micro mobility Insurance space. Here, I want to detail the rest of the import world.
We Don’t Make It Here Anymore — That’s the Real Problem
Starting in the 1980s, the U.S. made a long-term bet: we would outsource manufacturing and double down on design, branding, tech, and logistics. It worked—for a while. But we now find ourselves dangerously dependent on overseas supply chains for everything: electronics, home goods, clothing, furniture, batteries, appliances. No time like right now has this been so highlighted - especially colliding with irresponsible trade policy.
We never built a contingency plan.
So when leaders start floating tariffs of 50% or more—as both a trade weapon and a political message—they’re ignoring the fact that we don’t have the infrastructure to absorb the fallout.
This isn’t just a supply chain issue. It’s a risk issue.
The Insurance Industry Is Not Ready
As an insurance broker, I work with consumer product companies who import heavily from China. Everyone of these clients and anybody that supplies consumer goods right now is likely in a management meeting discussing how to deal with this issue. One of their first suggestions might be, let's renegotiate our insurance contracts. Unfortunately - as we outlined during Covid - insurance is inflexible to transactional volatility and your risk actually goes up, not down.
Here’s why:
When you are a manufacturer selling a product, this is a cumulative effort that creates an aggregate "stockpile" of products in use. If you've been selling ladders (my background) for ten years, and you sell 100,000 ladders per year, after 10 years, that's one million ladders in the market. A forty percent reduction in your sales is equal to, in that math, a 40,000 decrease in products for one year. That's 4% of your total stockpile. Think of each ladder as a grenade that can detonate at any time. Just because your current year sales valuation has decreased, it doesn't mean there are fewer land mines.
A second illustration of this risk comes in the form of credit risk. With more product in the ether and less funding, you become an even bigger risk to carriers because not only do you have all of these land mines to avoid, now you are insufficiently funded when you have to defend yourself against these land mines - along with any basic risks to conventional business planning. If you now become incapable of paying your deductible, you are at even bigger risk and an even bigger reason why premiums should not come down. I'm saying this, not in defense of the insurance companies, I'm saying this to prepare you for the conversations. It's not as binary as it seems.
And most insurance policies are not equipped to dynamically adjust for those shifts mid-term.
The Bigger Picture: Policy That Ignores Infrastructure Is Policy That Creates Risk
Tariffs are a blunt instrument, often wielded with short-term political goals. But the U.S. simply cannot manufacture its way out of this dependency in the near term.
It’s one thing to use tariffs to protect strategic industries like semiconductors. But applying them to broad categories of consumer goods—without a domestic industrial base to backfill—is a risk multiplier, not a solution.
Insurance and reinsurance carriers are the ones who end up footing the bill for the economic whiplash. Especially in sectors like:
Consumer electronics
Home and kitchen goods
Toys and recreational equipment
Small vehicles and batteries
These aren’t protected by carve-outs. They’re vulnerable, fragmented, and underinsured.
What Needs to Change
We can’t fix trade policy overnight, but we can improve how we model and manage risk:
✅ Rate risk based on unit exposure, not just sales. ✅ Evaluate credit risk and tariff sensitivity when setting SIRs. ✅ Build tariff and trade volatility into reinsurance structures. ✅ Empower brokers to renegotiate mid-term when economic shocks upend exposure.
We also need policymakers to understand: tariffs don’t just affect Walmart and Target. They ripple through insurance claims, underwriting, and financial solvency.
Final Thought: Insurance Is the Canary in the Coal Mine
We got lucky this week. But luck is not a strategy. Tariffs may be on pause—but the message is clear: we’re willing to tax the foundation of our consumer economy without the industrial tools to back it up.
And when the fallout hits, it won't just hit importers—it'll hit insurers, brokers, and consumers in the form of higher premiums, slower claims, and more exclusions.
The question isn’t whether we’ll feel the impact. It’s whether we’ll be ready the next time the pause button isn’t there.
