As the Trump administration returns to aggressive tariff strategies, business owners across the country are once again bracing for impact. On-again, off-again tariffs aimed at key trade partners like China, Mexico, and Canada are creating a volatile environment where forecasting costs, securing materials, and delivering products on time are increasingly difficult.
The unpredictability of these policies is creating ripple effects through global supply chains, threatening many businesses’ margins, operational stability, and customer relationships.
Recent data show that U.S. companies have already lost more than $34 billion due to tariffs, whether from direct duties, lost sales, or increased costs. Even businesses that don’t import directly from affected countries may face indirect impacts if their suppliers do.
A survey by Arthur J. Gallagher and Co. found that 90% of business owners are concerned about the effect tariffs are having on their operations, particularly in the form of:
- Supply chains disruptions due to changing routes and sourcing complications,
- Surging input costs that are difficult to pass on to customers,
- Manufacturing slowdowns driven by raw material delays or pricing volatility,
- Inventory hoarding to front-run new tariffs, which ties up working capital, and
- Dampened investment as companies adopt a wait-and-see approach.
What can businesses do?
Large multinational corporations may have the resources to weather tariff swings — rerouting orders, renegotiating contracts, and leveraging deep supplier networks. But for smaller businesses, limited buying power, narrower margin,s and lean supply chains mean there’s far less wiggle room.
Owners in industries like electronics, automotive parts, construction materials, and apparel are especially exposed. Many of these businesses rely on components or raw materials from Asia, where even slight delays or cost increases can disrupt production and reduce profitability.
Despite the uncertainty, business owners can take proactive steps to reduce their exposure to tariff shocks and improve supply chain resilience:
- Audit your supply chain — Identify all products and components exposed to tariffs (directly or through suppliers) and calculate the potential financial impact.
- Diversify sourcing — Spread risk across multiple suppliers and consider partners in countries not subject to tariffs or have lower tariffs than those imposed on Chinese goods. Where possible, increase domestic sourcing to reduce exposure to geopolitical disruptions.
- Negotiate flexibly — Work with suppliers to explore cost-sharing options, volume-based discounts, or adjusted contract terms to accommodate sudden tariff hikes.
- Use technology — Invest in supply chain and inventory management tools that help you track lead times, monitor pricing trends, and adjust sourcing strategies in real time.
- Stay informed — Tariff regulations often appear in the Federal Register or through U.S. Customs announcements. Stay on top of updates and take part in comment periods to voice concerns before rules are finalized.
- Have a response plan — Meet with legal or financial advisors to build a tariff mitigation plan. This might include adjusting pricing models, altering stock-keeping units, or building a reserve of critical inventory.
Supply chain insurance
Many business owners wonder if supply chain disruption insurance could cover losses tied to tariffs. The answer is nuanced.
Standard supply chain policies typically cover physical interruptions — like natural disasters, factory fires, or transportation breakdowns — that prevent a supplier from delivering goods. However, they usually do not cover economic disruptions, such as those caused by tariffs, trade sanctions, or changes in government policy.
That said, some insurers are developing specialty coverage or endorsements that address trade disruption or political risk. These emerging trade disruption insurance policies may offer protection against losses stemming from sudden changes in tariff regimes or government-imposed import restrictions, even in the absence of physical loss or damage to the policyholder’s goods or assets.
However, these policies tend to be more common in large-scale international trade and are priced accordingly.
Get a free Business Owner Policy quote online today!
Are you looking for Business Owner Policy insurance in Santa Ana, California? We are a top-rated local insurance independent agent protecting all aspects of your life, from your business to your autos and home, we have you covered! The benefit of choosing an independent agent like us means options. We have relationships with many top-rated carriers to give you the best Business Owner Policy insurance coverage you need that fits your budget. Don’t wait, call us today at (714) 285-9990 or visit our Quotes Online and start saving money.