Thrive During Cross Border Disruptions

Looking to new markets? Review your insurance

Getting ahead in business requires the ability to adapt quickly to threats, opportunities, and changes in the marketplace. The market disruptions since January 2025 – specifically, the U.S. trade tariffs – have caused many businesses to rethink their strategies and perhaps their entire business models. Those strategic adjustments ripple through the entire operation, including insurance coverage.

Prices and valuations will change, market opportunities may shift

KPMG interviewed 602 Canadian business leaders between Feb. 13 and 28 to understand their reactions and responses to the tariff threats. Nearly nine out of 10 (89%) export to the U.S. and 80% said they will be impacted by U.S. tariffs. But they remain united in fighting the U.S. tariffs, with 67% saying they can weather a trade war that lasts more than a year, and 86% supporting retaliatory tariffs against the U.S.

Food Business News predicted that the tariffs announced by the White House on April 2 have the potential to dramatically increase the cost of ingredients and finished food products in the United States. Although most food and agricultural products from Canada and Mexico are currently exempt under the existing United States-Mexico-Canada Agreement, the food system is intricately linked with global markets, and inputs and ingredients purchased from countries outside of North America to be added to products being sold to the U.S. could become more expensive to procure.

Forbes magazine also predicts that U.S. tariffs – whether direct, indirect, or just threatened – could dramatically reshape the U.S. food and beverage industry. The U.S. imported $40.5 billion of food from Canada in 2023. “Importers might initially absorb some costs to maintain their competitive edge, but over time, the price increases will inevitably flow downstream to distributors and other stakeholders.”

Interprovincial opportunities may emerge

Facing cost increases for their product inputs, and pressure to reduce prices, Canadian businesses, including food and beverage suppliers, are turning away from the traditional north-south trade corridors, and instead looking east and west for business opportunities. Canada’s fragmented trade policies have traditionally made it easier to do business with the United States than with other provinces, maintains the Retail Insider. To support their own farmers and small businesses, provinces operate under a system of quotas and restrictions for food products such as wine, dairy, and poultry, and farm supplies such as fertilizers, pesticides, and farm equipment, making the movement of these goods across provincial borders unnecessarily complex. But indications are that this will change.

KPMG’s survey found that eliminating interprovincial trade barriers was among the primary actions most leaders want the federal and provincial governments to take; 84% say the elimination of interprovincial trade barriers will be extremely or very important to the survival of their business in a trade war with the U.S.

Facing cost increases for their product inputs, and pressure to reduce prices, Canadian businesses, including food and beverage suppliers, are turning away from the traditional north-south trade corridors, and instead looking east and west for business opportunities.

Canada’s new Prime Minister, Mark Carney, maintains that, “The economic benefits from eliminating our internal trade barriers can more than offset the adverse effects from current U.S. tariffs.” One of his election promises was to develop a national trade strategy and eliminate interprovincial trade barriers.

“We intend from a federal level to have free trade by Canada Day,” he has said, noting that the plan initially would be directed at easing transportation, energy, critical minerals, and digital connectivity restrictions across the country.

Time to pivot?

As your business model pivots, so too should your insurance coverage.

• Are you tooling up for sales to new domestic or international markets? Don’t assume that your coverage of stock destined for the U.S. is still cost-effective for the same products going to new markets. Usually insurance premiums are higher for sales to the U.S., so reviewing your policy and re-rating it could yield premium reductions.
• Have your sales to the U.S. decreased or undergone pricing adjustments? You may need to adjust your valuations and liabilities on it.
• Have you shut down any U.S. locations or moved inventory previously stored in the U.S. back to Canada? Your policy should be updated to reflect changes to locations. You are likely paying higher premiums to have locations in the U.S. included in your policy.
• Have you reduced your inventory values? If there are significant changes to your inventory values, you should discuss changing your policy mid-term.
• Is the operational radius of your fleet changing? Have you discontinued or reduced deliveries to or operation of your vehicles in the U.S.? This may also reduce your premium, making mid-term changes to your policy worthwhile.

Stay nimble

Things change quickly when you’re doing business during a time of economic upheaval, and things can just as easily change again, or be reversed. The trust Canadians had in the United States as a political and trading partner took generations to build, and once gone, is not likely to be easily and immediately revived. When consumers are faced with sticker shock, they naturally seek alternatives. Just as we saw with the COVID-19 pandemic, some old buying habits eventually return; some are changed forever.

Your insurance broker can provide advice as you’re weighing your options, can offer solutions and suggestions for mid-term changes to your insurance coverages, and can change them again if the situation warrants. You can avoid coverage gaps and under and over-insurance by keeping your insurance broker informed as you review and revise your marketing plans.