Moral Hazards and Maple Syrup: How Trump’s Tariff Threats Could Impact Canadian Claims

When Donald Trump starts musing about tariffs, Canadians—and their insurance claims adjusters—take note. The former President’s proposal for a 25% tariff on imports might sound like the opening line in a political poker game, but the implications for Canadian businesses (and by extension, the insurance claims landscape) could be anything but bluff.

Moreover, these threats have politicians at every level of Canadian government scrambling to show they can stand up to our southern neighbors’ tough talk. From municipal leaders vowing local strategies, to provincial premiers issuing defiant press releases, to federal officials promising “bold” countermeasures—everyone is jockeying for position. Yet, with Canada nearing an election, many suspect the current leadership may be unable to deliver anything truly effective if Trump’s tariff card gets played.

As a Canadian claims company, we’re less concerned with the political drama and more focused on the tangible fallout: how all this might affect risk, claims patterns, and exposure to fraud. Below, we take a closer look at how Trump’s tariff threats could impact Canadian claims, along with strategies that can help us weather the uncertainty—maple syrup in hand.

Claims Implications of Potential U.S. Tariffs

Moral Hazard and Fraud Risks From Business Disruptions

If tariffs drive up costs for cross-border trade or push U.S.-focused investment out of Canada, some businesses will inevitably face financial distress. Sadly, economic strain can heighten the risk of moral hazard—where struggling companies exploit their insurance coverage.

Fraudulent Claims: Financially strapped businesses may resort to inflating losses, filing exaggerated claims, or even staging incidents (fires, thefts) to recoup funds.
Bankruptcies and Unresolved Claims: If a wave of business closures follows tariff impositions, insurers could be left with abandoned claims, complicated legal disputes, and drawn-out liability issues that strain resources and delay resolutions.

Increased Costs in Cross-Border Claims

Tariffs would raise the cost of Canadian goods for the U.S. resulting in the end products having a higher freight value. We expect this wil directly impacting cross-border claims.

Higher Freight Costs: When damaged goods need replacing, shipping costs and sourcing from abroad could become pricier, inflating claims values.
Delays in Delivery: Supply chain bottlenecks—from longer customs processes to U.S. companies hesitating on Canadian orders—might cause shipment delays. Claims professionals will need to separate legitimate delays from avoidable disruptions.

Warehouse Congestion and Stockpile Risks

Anticipating only short term tariffs, some businesses may stockpile inventory, creating unusually high inventory levels that affect claims.

Higher Insurable Values: Larger inventories drive up total value at risk, meaning claims for theft, fire, or water damage could be substantially more expensive.
Loss Adjusting Complexities: Adjusters may have to untangle whether a claim involves temporary excess inventory or inflated valuations, increasing complexity (and paperwork).

Political Posturing and Canadian Election Pressures

Canadians have dealt with tough tariff talk before, but this round comes at a precarious time, as the country nears a federal election. Every politician, from local mayors to the Prime Minister, wants to appear unflappable in the face of Trump’s threats. Bold statements abound, yet many are skeptical that our current leadership can deliver any meaningful pushback if a 25% tariff drops.

All Levels of Government Respond: Municipal leaders are promoting “buy local” campaigns, provinces are threatening retaliatory measures, and Ottawa promises to “stand firm.”
Election Uncertainty: With an election on the horizon, the likelihood of new policies or effective negotiation tactics diminishes if political will is divided—or if the leader simply can’t match Trump’s game of hardball.
Symbolic Valiance, Real Vulnerability: While public chest-thumping makes for headlines, our neighbors to the south may see Canada’s vulnerability clearly—especially when tariff talk hits the sectors we rely on most.

Despite the possibility that a 25% tariff is more bravado than imminent reality, the insurance sector should be prepared for certain impacts. The best strategy is to remain vigilant, especially regarding moral hazard, supply chain disruptions, and the potential for higher claims costs.

Strategic Playbook: Strengthening Canadian Businesses Against Uncertainty

While business owners can diversify or pivot to mitigate potential tariff hits, claims providers must operate in the “post-event” world, navigating the aftermath. Below are steps the claims industry can take to bolster Canada’s resilience in the face of looming trade threats.

Support Canadian Infrastructure Through Vendor Partnerships

As claims providers, we work closely with a network of vendors, suppliers, and service providers. By prioritizing local partnerships, we help reinforce Canadian infrastructure.

Choose Canadian Suppliers: Encourage contractors and specialists in the claims network to source materials and services domestically when possible, reducing reliance on costly imports.
Promote Local Expertise: Invest in Canadian talent for specialized claims services, from loss assessment and salvage to fraud investigation. This ensures our pool of experts is readily available during times of high demand.
Strengthen Supply Chain Relationships: Collaborate with Canadian vendors to ensure they have the capacity to handle surges in claim volume if tariff-related disruptions occur.

Prepare for Potential Post-Tariff Claims Patterns

We can’t prevent the turmoil tariffs might bring, but we can be ready for common side effects.

Enhance Fraud Detection Capabilities: Economic downturns can drive up fraudulent claims, so bolster training, use advanced analytics, and engage fraud detection specialists.
Develop Expertise in High-Value Inventory Claims: With potential stockpiling, adjusters should master valuation intricacies tied to excess inventory.
Anticipate Cross-Border Claim Delays: If tariffs exacerbate import/export slowdowns, adjusters will need strategies to manage client expectations and collaborate with vendors for quicker resolutions.

Monitor and Adapt to Economic Trends

Given the volatility that tariffs can introduce, staying in tune with economic shifts is essential.

Stay Agile in Underwriting Partnerships: Work with insurers to analyze real-time claims data, helping refine coverage terms and risk profiles in alignment with evolving market realities.
Provide Data-Driven Insights: By sharing industry-wide findings on how tariffs affect claims patterns, we help businesses—and insurers—plan for disruptions.

Engage the Canadian Business Community

While our role is primarily post-incident, we can still advocate for resilience and cooperation within Canada’s broader business ecosystem.

Foster Vendor Resilience: Support Canadian vendors in fortifying their operations against supply chain slowdowns, material shortages, or tariff-related challenges.
Encourage National Collaboration: Partner with other claims organizations to promote the use of Canadian suppliers, collectively strengthening domestic capacity.

Conclusion: Navigating Uncertainty With Confidence

Trump’s tariff threats may bring a sense of déjà vu to Canadian businesses, but the stakes—and potential claims fallout—are real. From increased fraud risk and inflated claim values to new political tensions right before an election, our claims industry must be prepared.

The silver lining? Canada has options. By investing locally, supporting businesses, and staying proactive, we can manage—and even mitigate—much of the potential upheaval. Should the 25% tariff threat prove to be just another moment of “Trump theater,” we’ll still have emerged stronger and more self-reliant, ready for whatever new twist might come next.

In the meantime, let’s keep calm, process those claims, and carry on—always with a sense of Canadian humor and plenty of maple syrup for sustenance. After all, if there’s one thing we’ve learned from our neighbors to the south, it’s that political bluster can sometimes be just that: bluster. But if it isn’t, we’ll be ready.