Freight and cargo flows in the spotlight following Trump tariffs

By Michael Jones

April 4 - (The Insurer) - The imposition of global tariffs on most goods imported into the U.S. has forced the marine insurance market to examine how freight and cargo flows could affect premium, rating and voyage risks, three senior market sources told The Insurer.

On Wednesday, the Trump administration set a universal "baseline" tariff of 10% on all imports, with some trading partners hit by higher levies of more than 50%.

Three senior marine market sources said they expect the tariffs to cause a contraction in global trade volume, which could lead to a reduction in overall marine insurance premium volume.

A reduction in market premium could lead to rate reductions as underwriters compete over a smaller pot to maintain market share and meet budget targets, two senior marine sources said.

The hull and cargo markets already experienced a degree of softening in the latter half of 2024 in response to increased capacity, two senior marine market sources said.

One senior cargo underwriting source said they did not believe the tariffs would cause increased rate reductions, while one marine hull market source suggested further rate reductions would be more likely in the cargo market, where rating is more often related to turnover.

Marine underwriters have also been forced to consider how any shift in global trade flows will impact the riskiness of client voyages.

Two senior marine sources said that any shift in European trade towards Asia, and vice versa, would see vessels forced to transit around the Cape of Good Hope or take the risk of transiting through the Red Sea, which remains a listed area following the Houthi campaign against commercial vessels.

As PwC noted in a commentary on Wednesday, the expected inflationary impact from the tariffs will also pressure specialty insurance products with a reliance on the repair or replacement of parts.

Two senior marine market sources said this would lead to a reassessment of values across the marine market as underwriters attempt to take into account expectations for heightened inflation and increased claims totals.

One segment of the market that three senior marine sources said could see the most direct impact was shipbuilding and builders’ risk given its close link to manufacturing costs.