Recent United States (US) tariffs on South Africa (SA), including a 30% rate implemented in August 2025, are expected to negatively impact SA’s economy by increasing the cost of exports to the US, particularly in the automotive, agriculture, steel and textile sectors. These new tariffs have superseded previously advantageous SA trade benefits, and threaten to disrupt supply chains, possibly necessitating market diversification for affected SA businesses to mitigate these risks.
Early indications are that this may affect the local insurance market in two ways. Given the potential for claims inflation, longer delays, and increased complexity, rates will continue to come under review in marine cargo and construction lines. Additionally, insurer data requirements may increase, driving requests for bill of materials (BOM) details, lead-time distributions, and contingency plans for critical imports.
What are non-life brokers and their clients likely to experience, and how can any risks be managed?
Marine insurance
1) Valuation creep and underinsurance: Marine cargo cost, insurance and freight (CIF) values may climb with tariff-inflated invoice prices. If sum insured (SI) and limit increases lag, the average clause may be applicable at claims stage. Regularly review annual SI estimates, declaration volumes, policy limits and valuations. Consider replacement values of US manufactured pleasure craft, and encourage policyholder awareness.
2) Delay-driven perils: Broader tariffs slow customs clearance and encourage re-routing and split shipments. Extended transit / warehouse time raises theft, temperature deviation, and deterioration risks.
3) Contract complexity: Incoterms clearly define the responsibilities, costs, and risks for both buyers and sellers in international trade and are essential for establishing insurable interest during transportation. While Incoterms don’t set tariff rates, they assign the liability for the costs and duties associated with importing goods, which is crucial for businesses to manage risk and unexpected cost increases. Increases in inspections and paperwork are also likely to boost administrative error exposures, so seeking clarity from industry bodies such as SA Chamber of Commerce, and tightening these terms, will reduce potential for misunderstandings and disputes.
4) Political & trade credit spillovers: Cancelled US orders can spill into insolvency and non-delivery risks. Consider contingent business interruption (CBI) and trade credit where relevant.
Engineering and construction insurance
1) Sum Insured adequacy: Customers could be faced with a situation where property has been purchased prior to the implementation of tariff increases, but with loss or damage on this property occurring after the tariff increase, resulting in the new purchase price being significantly higher.
Where construction plants and machinery are imported from the US, replacement of parts may be more expensive, leading to increased claims cost. Insurers will usually request a new replacement value as the SI. Monitor and increase as appropriate to prevent underinsurance.
Price increases on steel, aluminium, transformers, heating / ventilation /air-conditioning (HVAC) and electrical equipment may result in under-declared contract values. Adjust contract price escalation clauses and add provisional sums for volatile items where appropriate.
Regarding Project Delay covers, if a single US supplier (or a supplier dependent on tariff-hit components) is on the critical path, map and endorse named-supplier extensions or CBI covers. It is important to consider the entire supply chain and the risk of longer lead times for any goods imported from other countries that are subject to tariffs (direct or retaliatory).
2) Materials escalation and deductibles: Re-calibrate escalation limits, reinstatement of SI, and deductible structures to account for increased volatility. Examples from prior tariff rounds show that material price increases can supersede existing allowances.
3) Insolvency of contractors / sub-contractors: Margin pressure will increase default / abandonment risk. Review advance payment and performance bond requirements and how they could affect the project policy.
In conclusion, awareness, consultation and communication between all role players will be critical as the roll-out of these new US tariffs takes place, and their impact becomes clear.