The maritime industry is accustomed to working with insurance to cover the possibility that their contracts might face business problems, severe weather or even shipping disasters. But the Trump administration’s tariff policies have introduced new uncertainties and threats in what can be a high-risk line of work.
Fast-changing situation
While the tariff rates have been in flux for months, the bottom line is that they affect a huge number of products involved in shipping, from the products transported to the cranes used in unloading them from ships.
The question of who pays the tariffs is generally covered in the shipping contract. If the terms of an international commercial contract specify “Delivery Duty Paid,” the seller must pay the tariffs. If the terms of the contract specify “Cost, Insurance and Freight” or “Free on Board,” ordinarily, the importer must pay the tariffs. This payment occurs on delivery.
Can insurance help?
Ideally, before the shipment leaves port, all parties would understand all the tariffs involved, who is going to pay for them and when. In reality, this isn’t always possible. This can lead to canceled orders and even refused shipments.
If this happens, the parties may have to rely on their insurance policies to help them cover their losses. Some policies have provisions regarding refused or returned shipments. However, insurance policies generally do not cover the losses associated with orders that are canceled before shipment.
In this fast-changing situation, both importers and exporters must be very careful. It’s important to look over contracts and insurance policies carefully. It’s also wise to make the possible costs of tariffs part of the calculations when valuing the goods involved.
In these considerations, it’s wise to seek out help from professionals who have experience in maritime matters, and particularly in maritime insurance.