Rising tariffs on US imports: Cargo insurance considerations

Rising tariffs on US imports

Key cargo insurance considerations

4 minutes read

Published 02/19/2025

Container ship on river harbor, Tacoma, Washington, USA

Introduction

The evolving trade landscape, marked by uncertain increases in tariffs on US imports, presents new challenges for importers and businesses involved in global supply chains. Rising tariff costs not only affect the price of goods but also introduce complexities in cargo insurance. Key concerns include insured value inflation, cargo value accumulation, demurrage costs, and heightened theft risks — factors that can significantly impact insurance coverage and risk management strategies.

Insured value inflation

The United States is the largest goods importer in the world, and imports totaled $4.1 trillion in 2024. Higher tariffs directly affect the declared value of imported goods. As duties, taxes, and fees increase, the total landed cost of shipments rises to get a product from the seller to the buyer, requiring adjustments to insurance coverage. For example, due to increased tariff-related costs, a shipment of electronics, previously insured for $5 million, may now require coverage at $6.5 million. Without updated coverage limits, businesses may face significant financial exposure in the event of loss or damage.

$4.1tn

total imports in 2024

$6.5m

coverage a $5m shipment could now require

$3k

average US car prices could potentially rise

According to The Wall Street Journal on MSN.com, imported commodities particularly susceptible to cost increases due to the proposed tariffs include electronics, children’s toys, oil and gas, avocados, and automobiles. Per the Trade & Transportation News, “…average US car prices could rise by around $3,000.” The breadth of commodities potentially impacted by tariffs and the possible cost increases highlight the need for careful review of insured values.

Cargo value accumulation

To offset higher tariffs, many importers are consolidating shipments or increasing order sizes. While this approach can help manage costs, it leads to a concentration of high-value goods at various points in the supply chain. Warehouses, ports, and distribution centers now handle larger volumes of valuable cargo, increasing the potential financial impact of a single loss event.

It’s important to remember that tariffs are only one of a number of factors with the potential to influence cargo accumulation in 2025. Per a recent Global Trade Magazine article, compounding variables in the supply chain include tariffs as well as new ocean carrier alliances, labor strikes and shortages, front-loading due to the Chinese Lunar New Year, the ongoing e-commerce boom, and a host of geopolitical events that have forced trade routes to adapt. Supply chain disruption of this nature leads to the accumulation of cargo, and, with greater accumulation, storage locations and transit routes may become high-risk exposure points that require careful attention.

Demurrage costs and delays

Tariff-related complexities in customs clearance processes can lead to longer wait times at ports, resulting in increased demurrage and detention fees. It’s worth noting that increased values of imports caused by tariffs also cause increased security amounts required by US Customs and Border Protection (CBP). This security, required on all imports into US commerce, usually comes in the form of surety bonds, and it can take time to procure new bonds at higher amounts. These delays not only add to the financial burden but also extend the period during which goods remain exposed to risks such as spoilage, theft, or damage.

Port congestion in recent years has led to longer-than-usual delays for cargo pick-up and substantial demurrage costs. Per the Federal Maritime Commission’s Demurrage and Detention Billing Requirements ruling of 2024, nine of the largest carriers servicing US ports collected approximately $6.9 billion between 2020 and 2022. Daily demurrage rates vary by port and carrier, but they can add up quickly, and extended dwell times amplify the need for cargo insurance solutions that account for storage-related exposures.

Increased theft risk

Tariffs raise the value of cargo, which makes packages more appealing to thieves. Criminal organizations often target goods in transit or those stored for extended periods at vulnerable locations such as ports and rail yards. A 2024 CargoNet report indicates a 27% increase in cargo theft incidents, with electronics, automotive parts, and consumer goods being primary targets.

Enhanced security measures, such as GPS tracking and secure storage practices, can help mitigate these risks, but comprehensive cargo insurance remains essential in addressing potential losses.

Conclusion

The impact of rising tariffs on cargo insurance is multifaceted, influencing coverage needs across various stages of the supply chain. Insured value inflation, increased cargo accumulation, demurrage expenses, and theft risks all require careful consideration to ensure adequate protection. As businesses adapt to shifting trade policies, staying informed about evolving risks and reviewing insurance strategies becomes increasingly important.