Navigating Tariffs and Concentration Risk: How Trade Credit Insurance May Help

May 17

Written By Will .

The global trade landscape in 2025 remains influenced by tariff policies and geopolitical developments, which may create uncertainties for companies engaged in international commerce. Tariffs can potentially increase costs, disrupt supply chains, and impact customer payment behaviors, thereby raising credit risk.

Understanding the Impact of Tariffs

Recent adjustments in tariffs on key commodities and manufactured goods may lead businesses to reassess pricing, supplier relationships, and contract terms. This environment may increase the likelihood of payment delays or disputes, particularly in industries heavily reliant on cross-border trade.

Managing Concentration Risk

Companies with a high concentration of receivables from a limited number of customers or regions may face amplified risk if tariffs affect those customers disproportionately. Diversifying the customer base and geographic exposure may potentially reduce vulnerability to these shocks.

How Trade Credit Insurance May Provide Support

Trade credit insurance may help mitigate these risks by covering losses arising from customer insolvency or protracted payment defaults, including those potentially triggered by tariff-related financial stress. However, brokers should be aware that insurers may tighten underwriting standards or limit capacity in sectors most affected by tariffs.

Strategic Recommendations

Engage in proactive credit monitoring: Early identification of at-risk accounts may allow timely intervention.
Consider alternative financing solutions: Asset-based lending or factoring may provide liquidity buffers.
Leverage trade credit insurance thoughtfully: Tailoring coverage to reflect current geopolitical risks may optimize protection.

Final Thoughts

While tariffs and concentration risk may present ongoing challenges, businesses that adopt a comprehensive risk management approach-including trade credit insurance-may better navigate uncertainties and protect their cash flow in 2025.

Will .