US tariffs on cargo insurance may sound like a niche topic, but they can significantly impact your bottom line if you are in the import/export or logistics business.
In today’s article, Azure Risk will explain these tariffs, how they affect shipping costs, and how to stay compliant while protecting your cargo and your company.
We shall now explore this further.
What Are US Tariffs on Cargo Insurance?
Tariffs are government-imposed taxes on imported or exported goods. In the context of cargo insurance, US tariffs on cargo insurance refer to the additional costs that importers may incur due to increased duties and fees associated with insuring goods in transit.
These tariffs can influence the overall valuation of shipments, thereby affecting insurance premiums and coverage requirements.
Also Read: How Maritime Disruption Is Rewriting the Rules of Global Supply Chains
Why Do They Exist?
These tariffs exist as part of broader trade policy measures to protect domestic industries and address trade imbalances. The U.S. Customs and Border Protection (CBP) enforces these tariffs to ensure compliance with trade regulations and to collect appropriate duties. Recent policy changes have intensified these measures, impacting various international shipping and insurance aspects.
Costs Involved with Cargo Insurance Tariffs
Be it shipping electronics, textiles, or perishables, cargo insurance is your safety net. However, it comes with a price tag, especially when US tariffs enter the picture.
These tariffs apply not just to goods but also to the insurance that protects them. Several factors influence how much you will pay, from cargo value to destination and policy type.
Understanding these costs early helps you budget smarter and avoid unexpected fees. Partnering with Azure Risk, a leading Asia Pacific insurance broker, can help streamline this process and guarantee your coverage stays compliant and cost-effective.
How Tariffs Are Calculated
The calculation of U.S. tariffs on cargo insurance involves several factors, such as:
1. Declared Value of the Cargo
As tariffs climb, many global importers adjust their logistics strategies, combining shipments, placing larger orders, and moving faster to beat tariff deadlines.
While these tactics may reduce short-term costs, they also create new vulnerabilities. With high-value goods concentrated at key checkpoints like ports, warehouses, and distribution centers, a single disruption can lead to significant financial loss. Add to today’s unpredictable variables, from labor strikes and shifting ocean carrier alliances to geopolitical instability, and it is clear that proactive risk planning is not optional; it is vital.
At Azure Risk, we help clients navigate these challenges with precision, ensuring the protection of their cargo through every phase of the supply chain.
2. Type of Goods
Certain goods indeed attract higher tariffs based on their nature or country of origin, significantly impacting import costs and necessitating strategic planning for your businesses.
Here are a few goods that typically face high tariffs:
a. Steel and Aluminum Imports
According to GHY International, as of March 12, 2025, the U.S. imposed a 25% tariff on all steel and aluminum imports, eliminating previous exemptions for countries like Canada, Mexico, and the European Union.
This move aims to bolster domestic production and address national security concerns related to overcapacity and unfair trade practices.
b. Chinese-Origin Products
The U.S. has increased tariffs on various Chinese goods, including a 100% tariff on electric vehicles and a 50% tariff on semiconductors, effective August 1, 2024. These measures are part of efforts to address trade imbalances and protect domestic industries, quoted from China Briefing.
c. Critical Minerals and Rare Earth Elements
Cited from the Financial Times, in the ongoing U.S.-China trade tensions, critical minerals like dysprosium and neodymium have become focal points. China’s dominance in processing these materials and its export controls have heightened concerns among U.S. manufacturers reliant on these imports.
3. Origin and Destination
US tariffs on cargo insurance often vary depending on the countries involved in the shipment, as international trade agreements, geopolitical relations, and country-specific trade policies can significantly influence the duties applied.
4. Insurance Coverage
Comprehensive coverage often comes with higher premiums, particularly when tariffs inflate the total shipment value, increasing the insured amount. Since cargo insurance is typically calculated as a percentage of the shipment’s declared value, any additional costs due to tariffs can directly impact your premiums.
For instance, according to Munich Re, a shipment of electronics previously insured for $5 million may now require coverage at $6.5 million due to increased tariff-related costs. This adjustment reflects the direct impact of US tariffs on cargo insurance valuations.
Another example: If your shipment of electronic goods originally valued at $100,000 is now subject to a 25% tariff, the insured value rises to $125,000, which means higher costs for full coverage.
Real-World Examples
Recent developments have highlighted the tangible effects of these tariffs:
1. Cathay Pacific Airways
They anticipate a decline in air cargo demand between mainland China and the United States due to the impact of increasing tariffs and changes to the U.S. “de minimis” rule. Starting May 2, the U.S. will eliminate the exemption for import tariffs on goods valued under $800 from China and Hong Kong.
2. DHL
They have temporarily suspended high-value business-to-consumer deliveries to the U.S., citing import policy changes linked to ongoing trade tensions. The suspension affects shipments valued over $800, amid growing delays caused by new U.S. customs requirements.
The Impact of These Tariffs on Businesses
Who Is Most Affected?
The sectors most impacted by US tariffs on cargo insurance include:
- Importers and Exporters: Increased costs can erode profit margins and complicate pricing strategies.
- Freight Forwarders: Additional administrative burdens and potential delays can affect service levels.
- Manufacturers: Higher input costs may necessitate adjustments in sourcing and production.
Small and medium-sized enterprises (SMEs) may feel the pressure more acutely due to limited resources to absorb or mitigate these additional costs.
Budgeting and Risk Management
Understanding and anticipating US tariffs on cargo insurance are crucial for effective budgeting and risk management.
Failure to account for these tariffs can lead to:
- Unexpected Expenses: Sudden increases in duties can disrupt financial planning.
- Compliance Risks: Inaccurate declarations may result in penalties or shipment delays.
- Insurance Gaps: Underestimating shipment values can lead to insufficient coverage.
To navigate this complex landscape, proactive measures, such as revising insurance valuations and staying informed about policy changes, are essential.
Staying Compliant with US Cargo Insurance Regulations
To ensure compliance with U.S. cargo insurance regulations, your businesses should maintain accurate and up-to-date documentation, including:
- Proof of Insurance: Valid certificates detailing coverage specifics.
- Tariff Classification Codes: Correct Harmonized Tariff Schedule (HTS) codes for all goods.
- CBP Declarations: Comprehensive and truthful customs declarations.
Adhering to these documentation requirements helps prevent legal issues and facilitates smoother customs clearance.
Tips to Avoid Penalties
- Partner with Certified Brokers: Collaborate with experienced insurance brokers like Azure Risk who understand the intricacies of international trade and tariffs.
- Regularly Review Documentation: Make sure all shipping and insurance documents are accurate and reflect current regulations.
- Stay Informed: Monitor updates from CBP and other relevant authorities to comply with evolving policies.
Choosing the Right Partner to Manage Cargo Insurance Tariffs
Why does a specialist broker make a difference? Navigating US tariffs on cargo insurance requires specialized knowledge and expertise.
A seasoned insurance broker can help you with:
- Provide expert guidance
- Optimize coverage
- Streamline processes
Partnering with an experienced insurance broker is invaluable when managing the complexities of US tariffs on cargo insurance. The good news? Partnering with Azure Risk means peace of mind.
Through expert guidance, seamless compliance, and smarter cargo protection, Azure Risk, the Official Asia Pacific Broker for World Insurance, offers your businesses industry-leading expertise in global cargo protection, customs compliance, and cross-border risk strategy.
Don’t let tariff confusion hold your business back. Partner with us now for tailored cargo insurance advice, expert brokerage service, and full regulatory support.
Get in touch today and ship smarter.
