The US Supreme Court’s decision striking down President Donald Trump’s sweeping emergency tariffs will reverberate in the insurance industry
In a 6-3 ruling, the court held that the administration exceeded its authority under the International Emergency Economic Powers Act (IEEPA), dealing a significant blow to a cornerstone of Trump’s economic agenda.
At the same time, it could potentially ease inflationary and supply chain pressures that have weighed on insurers’ underwriting, claims costs, and political risk models.
Here are five ways the ruling could affect insurance:
The tariffs, which were as high as 145% on imports from China, disrupted supply chains across industries, including automotive, construction, and manufacturing. Elevated import costs led to higher replacement values for equipment, auto parts, and building materials.
The Insurance Information Institute (Triple-I) in the US warned that this would lead to higher claims costs for carriers, which might then pass them on to customers through premium increases.
With the Supreme Court ruling the tariffs unlawful, insurers may see improved pricing stability in commercial property and inland marine lines. Lower input costs can reduce insured values and replacement cost inflation, potentially easing pressure on loss ratios that had been strained by tariff-driven price spikes.
Canadian insurers, particularly those underwriting cross-border trade exposures, could also benefit as supply chains normalize between the US and key trading partners, including Canada and Mexico.
Celine Butler, Commercial Account Executive from PAIB Insurance Inc, told Insurance Business "Any shift in trade policy, even one not directly aimed at forestry creates ripple effects in pricing, project timelines, and capital investment in a sector already shaped by fluid trade dynamics, volatile cost history, tight margins, and regulatory pressure. As brokers, it’s our responsibility to stay informed, recalibrate how risk is assessed, and guide our clients through uncertainty so they can adapt, grow, and invest with confidence, which is exactly our priority here locally at PAIB Insurance Inc."
A major unresolved issue is what happens to the more than $134 billion already collected in tariffs. The court did not clarify whether importers are entitled to refunds, leaving the matter to lower courts.
If refunds are ordered, the process could be complex and prolonged, creating financial uncertainty. Trade credit insurers and political risk underwriters may face claims tied to importers’ cash flow disruptions during a potentially lengthy reimbursement process.
Directors and officers (D&O) insurers are also watching closely. Public companies that relied heavily on tariff-inflated pricing strategies could face shareholder litigation if financial forecasts unravel due to refund obligations or market volatility.
The ruling reinforces judicial limits on executive power, particularly under emergency statutes. For insurers, this may temper political risk premiums tied to unilateral trade actions.
At the same time, the decision underscores regulatory unpredictability. Insurers modeling geopolitical risk, especially those covering multinational firms, must now account for the possibility that sweeping trade measures can be swiftly reversed by courts.
Canadian carriers with US subsidiaries may benefit from a more predictable legal framework, though cross-border regulatory complexity remains a factor.
Tariffs functioned as a tax on imported goods, contributing to inflationary pressures in certain sectors. Commercial insurers adjusted underwriting models to reflect higher material and labor costs, particularly in property and builders’ risk coverage.
If tariffs are unwound or narrowed, the inflation assumptions embedded in premium pricing may need to be recalibrated. Actuaries could revise downward long-term cost trends, especially in sectors heavily exposed to imports from China and other targeted countries.
However, insurers may proceed cautiously until refund litigation and potential alternative trade measures are resolved.
The Supreme Court’s decision brings at least one positive development for the US’s neighbor: trade stability.
Canada was directly affected by Trump-era tariffs, particularly on steel and aluminum. For Canadian insurers underwriting manufacturing, transportation, and export-related risks, greater stability in US trade policy reduces volatility. It may also improve loss forecasting tied to business interruption and contingent business interruption coverage.
As lower courts tackle the refund question and policymakers weigh alternative tariff authorities, insurers on both sides of the border will be closely monitoring developments that could reshape trade, pricing, and risk exposure across North America.
