Insurers face the prospect of renewed tariff pressure after the US midterms, with an economist warning that a weaker Republican position in Congress could leave President Donald Trump more active on trade and foreign policy.
Speaking during an election briefing, Marcos Carias, North America economist at trade credit insurer Coface, said a Democratic takeover of the House would make domestic legislation harder to pass. But the resulting gridlock would leave the president with considerable room to pursue trade and foreign policy measures that could affect claims costs and commercial clients’ finances.
“Just because the president will be more constrained at home does not mean that this is an effective end to the Trump presidency," Carias said. "In fact, we think there’s a high chance that he will become more active here after the midterms.”
Read more: President Trump’s approval hits new low in Reuters/Ipsos poll – what that means for insurance
Coface’s central expectation is that Democrats will regain the House, while control of the Senate remains uncertain. Carias said losing either chamber would complicate the administration’s legislative agenda, given the difficulty of securing bipartisan agreements.
Democrats would also struggle to enact their own program because Trump would retain his veto. Overriding it requires two-thirds support in both chambers.
“Donald Trump will retain control over trade and foreign policy. Here, there is a lot less power for Congress to limit him, especially in the short term,” Carias said.
He highlighted the Section 301 investigation into excess manufacturing capacity among major US trading partners as a potential route to further action. USTR launched those investigations in March, covering economies including China, the European Union and Mexico. Its illustrative list of relevant sectors includes vehicles, machinery and construction materials.
The potential insurance impact varies by line, depending on exposure to imported goods and how much of the additional cost suppliers pass through.
Aon research presented at the Casualty Actuarial Society’s 2026 Spring Meeting examined how tariff changes feed into loss costs. The analysis modeled post-tariff inflation of 5.7% for auto physical damage and 4% for residential and commercial property construction costs, compared with a 2.8% baseline.
Vehicle replacement costs were the largest driver of the modeled auto impact. The estimates depended on assumptions about whether businesses absorbed tariff costs or passed them to customers, making the extent of that pass-through important to insurers’ pricing calculations.
For property placements, higher replacement costs can also erode the adequacy of insured values. Marsh’s tariff guidance warns that existing limits may become insufficient, while percentage-based deductibles can leave policyholders retaining larger amounts.
Supply constraints create another complication: difficulty securing equipment or parts can extend repairs and business interruption. Brokers reviewing affected accounts therefore need current replacement estimates alongside realistic recovery timelines, including for goods purchased domestically that contain imported components.
Read more: Tariff pause is temporary – the exposure shift for clients isn't
Carias said the administration’s approach remains subject to adjustments intended to manage the effects on US businesses. “We know that the administration likes to tinker with the details, things like implementation dates and exemptions, to try to limit the undesirable effects on the domestic economy,” he said.
Trade credit insurers face exposure through the financial health of their policyholders’ customers. Companies absorbing higher input costs may have less room to withstand weaker sales or financing pressure.
Allianz Trade’s October outlook forecasts US business insolvencies rising 12% in 2026 and another 4% in 2027. Globally, it expects increases of 5% and 1%, respectively. The forecasts reflect broader economic pressures, including financing and energy costs, rather than losses attributable solely to tariffs.
US’ trade dispute with Canada illustrates how quickly the policy assumptions facing businesses can change. After negotiations collapsed in August, Trump threatened to raise tariffs on Canadian vehicles and automotive parts to 50% from January 1, 2027, from existing duties of up to 50% on Canadian steel and 25% on autos.
Read more: US-Canada tariff war escalates as Ottawa hits back with $20 billion tariffs
However, the two countries were working on a deal to ease steel and auto tariffs, Reuters reported on October 26. Sources suggest an agreement could come before the November 3 midterms, but the threatened January increase remains a source of uncertainty as negotiations continue.
