What Canadian P&C industry must do now after tariffs revealed
Priority 1 for Canadian P&C insurance professionals is to try and make sense of how U.S. President Donald Trump’s tariffs, announced last week, will affect their commercial clients, a Deloitte partner told Insurance Bureau of Canada’s Financial Affairs Symposium last Thursday.
“I think from an industry perspective, the first challenge is to figure out and understand which of your sectors have been most impacted [by the tariffs], and which of your customers have been most impacted,” said Mario Iacobacci, partner and economic advisor at Deloitte. “What I mean by that is: Is it the big firms, or the small and medium-sized businesses? And which ones are likely to struggle?
“Because a lot of your liabilities depend on those issues…and also your exposure. Understanding that is the first step. And then adapting your offer, your coverage, your policies, to tune [into] those requirements is quite important as well.”
Iacobacci was speaking at a panel on cross-border dynamics between the U.S. and Canada, and the potential impact of U.S.-Canadian trade relations on the P&C insurance industry.
The big question for everyone is how long Trump’s tariff policy will last, Iacobacci said.
Since Trump announced his retaliatory tariffs policy last week, U.S. stock markets have plummeted. The Wall Street Journal reports the value of U.S. stocks fell $6.6 trillion over two days following his reciprocal tariffs announcement.
On Friday, U.S. stock markets lost the most value since the global COVID-19 pandemic, as the WSJ reported. The S&P 500 dropped 6%, the Dow plunged 5.5%, and the Nasdaq composite dropped 3.8%. The trend continued into Monday. At midday, as of press time, the S&P 500 was down 1.7%. The Dow was down 860 points, or 2.2%, as of 1:05 p.m. ET, while the value of the Nasdaq composite market took a 1.4% hit.
Related: What former PM told insurers about responding to Trump tariffs
Republican senators have proposed to reassert Congressional authority over tariffs, although the House of Representatives, controlled by Republicans, have thrown their support behind Trump’s trade policy.
U.S. Secretary of State Howard Lutnick told CBS’s Face the Nation Sunday that “there is no postponing” of the reciprocal tariffs. “They are definitely going to stay in place for days and weeks. The president needs to reset global trade. Everybody has a trade surplus and we have a trade deficit.”
Trump, meanwhile, is holding firm that the equity markets may need to “take medicine” and that “someday people will realize that tariffs, for the United States of America, are a very beautiful thing!”
Iacobacci said Thursday historical examples show tariffs typically don’t last very long. In his inaugural address, Trump lauded William McKinley, America’s 25th president, for implementing tariffs during his first term in 1897. McKinley was assassinated in 1901, early in his second term.
“Nobody really has a crystal ball, but let’s go back in history a little bit and kind of see how long these things lasted when they happened in previous periods,” Iacobacci said. “So, you’ve all heard of the McKinley tariffs back to the 1890s? Well, they lasted a term.
“And when you look at other periods, they didn’t last very long either, right? They may have lasted a few years before they came back down to more reasonable levels.
“I would be surprised, certainly this is a personal opinion, that these things would even last the full term of the current administration. Because the results will be obvious well before that. And it won’t be pretty, either for the U.S. or for us in many ways, because we [in Canada] have imposed a retaliatory tariffs so they will hurt.”
