On April 9, 2025, in a dramatic reversal, President Trump announced a 90-day pause on his recently implemented "reciprocal" tariffs for most countries, with the notable exception of China. The president announced a three-month pause on reciprocal tariffs that had gone into effect at midnight, lowering them to a universal 10% rate during this period. This pause was implemented to allow for trade negotiations with those countries. The White House clarified that during these 90 days, "the tariff level will be brought down to a universal 10% tariff" while "negotiations are ongoing."
Notably, China is excluded from this pause. Instead of receiving relief, China faces an increase in US tariffs to 125% "effective immediately". “Given the import bill from China, this tariff alone amounts to an enormous $400bn tax hike on U.S. households and businesses before substitution,” said Nora Szentivanyi, senior global economist at J.P. Morgan.
Despite this temporary reprieve for most trading partners, economic experts remain cautious about the longer-term outlook.
The 90-day tariff pause offers only temporary relief and actually increases uncertainty in global supply chains. With negotiations ongoing and the prospect of reinstated or modified tariffs after the pause period, businesses face an extended timeline of volatility and unpredictability in shipping costs, routes, and timelines
The global trade environment has entered a new era of protectionism, marked by President Trump's recent implementation of sweeping tariff policies. On April 2, 2025, Trump announced what has been called "liberation day," revealing new tariffs on trading partners that will hit international markets "immediately," according to the White House. These measures include a 25% tariff on all steel and aluminum imports effective March 12, 2025, encompassing imports from all countries without exception. Additionally, specific tariffs have been implemented on China, Canada, and Mexico, with European Union countries next in line.
The recent tariff announcements have triggered what many experts are now describing as a full-scale trade war. Canada and Mexico are facing 25% tariffs on their exports to the US, though automakers received a 30-day exemption to allow time for supply chain adjustments. These actions have prompted retaliatory measures from affected nations, with China, Canada, and Mexico all announcing increased duty tariffs on US products, and the EU expected to follow suit.
The tariff war has caused significant disruption to established global supply chains, forcing companies to reconsider their logistics strategies. According to recent data from BIMCO, there was a 28% fall in the China Containerized Freight Index (CCFI) from the beginning of 2025 to the end of the first quarter, representing the worst Q1 for Chinese freight orders in two decades. This dramatic decline stands in stark contrast to the historical average Q1 decrease of just 2% since 2006.
In anticipation of tariff implementation, many US companies rushed to import goods before the new measures took effect. Action at U.S. warehouses for the nation's largest retailers hit the highest levels ever recorded, according to supply chain research firm Motive. This front-loading created a surge in freight activity in early 2025, followed by a significant drop in new freight orders as businesses adopted a wait-and-see approach.
The tariff landscape has forced businesses to rethink their transportation routes and methods. Many international 3PL companies reported increases in imports from China as importers built up inventories before the holiday season and before new tariffs took effect. Freight forwarders have also noticed an increase in ocean freight shipping from Vietnam and other countries, as Chinese companies ship products from alternative locations to avoid additional duties.
The new tariffs represent the largest tax increase since 1982, amounting to an average tax increase of more than $1,900 per US household in 2025. For businesses involved in international trade, these costs are even more substantial, with landed costs rising significantly. As noted by UPS Supply Chain Solutions, "US trade policy changes will likely increase landed costs due to tariffs and require adjustments to import declarations."
One of the most immediate impacts of tariffs on logistics insurance is the increase in declared values of shipments. Higher tariffs directly affect the declared value of imported goods. As duties, taxes, and fees increase, the total landed cost of shipments rises, requiring adjustments to insurance coverage. For example, a shipment of electronics previously insured for $5 million may now require coverage at $6.5 million due to tariff-related costs.
The front-loading of inventory and changing shipping patterns have led to increased accumulation risks. To offset higher tariffs, many importers are consolidating shipments or increasing order sizes, leading 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.
The pause in tariff will likely create a surge in freight orders in the US and a risk of port congestion.
As businesses adapt to tariff-induced changes, many are finding gaps in their traditional insurance coverage. Logistics companies must review their policies to ensure adequate coverage for:
Perhaps the most significant impact of trade wars on logistics insurance is the increased prevalence of delay-related losses. Traditional cargo insurance typically covers physical loss or damage to goods but often excludes losses stemming from delays. As supply chains become more volatile due to tariff-related disruptions, businesses face growing financial exposure from delayed shipments like the ones we see in Europe right now..
In response to the changing risk landscape, Otonomi’s parametric cargo delay insurance has emerged as an innovative solution. Unlike traditional insurance that pays based on proven financial loss, parametric insurance pays a predetermined amount when a specific trigger event occurs, such as a shipment arriving later than an agreed threshold.
Parametric coverage enhances the protection provided by traditional cargo insurance by including an element of delay coverage that was previously challenging to insure. Using an artificial intelligence-assisted algorithm, Otonomi can deliver instant marine cargo delay coverage quotes to time-critical shippers and cargo owners.
Parametric cargo delay insurance offers several advantages particularly relevant in today's volatile trade environment:
This heightened uncertainty makes the case for parametric cargo delay insurance even stronger. The temporary nature of the tariff pause means businesses must remain prepared for rapid shifts in trade policy that could occur with little warning. Cargo delay insurance provides a critical safety net during this 90-day window and beyond, protecting against the financial impacts of disruptions regardless of how tariff negotiations conclude. TaxFoundation.org estimates tariffs will cause imports to fall by slightly more than $800 billion in 2025, or 24 percent.
The current environment of policy uncertainty, coupled with already strained global supply chains, means that shipping delays and disruptions remain a significant risk even during the pause period. Businesses that implement comprehensive protection through parametric cargo delay insurance now will be better positioned to navigate both the current 90-day negotiation window and whatever tariff landscape emerges afterward.
For businesses navigating this complex landscape, a thorough understanding of both tariff impacts and emerging insurance solutions is essential. By combining traditional insurance approaches with parametric innovations, logistics operators can build more resilient supply chains capable of weathering the current trade uncertainties and emerging stronger for the future.