Canada’s retaliatory counter-tariffs on U.S. imports take effect, imposing duties ranging from 15% to 50% on approximately $27.6 billion worth of goods. Targeting products from machinery, tools, and HVAC equipment to paper products and raw materials, these trade measures mark a shift in cross-border commerce.

For Canadian small and medium-sized business owners, the impact extends far beyond immediate supply chain adjustments—it directly affects your commercial property insurance and equipment coverage limits.

Here is what business owners need to know about navigating insurance risks during trade disputes.

The Underinsurance Trap: Soaring Replacement Costs

Commercial property policies base their coverage limits on the cost to replace equipment, tools, inventory, and building structures. When tariffs drive up the landed cost of imported equipment and commercial supplies by 15% to 50%, the cost to rebuild or replace those assets after a loss increases accordingly.

• The Risk: If your machinery or tools were insured based on last year’s prices, your current policy limit may no longer cover the full cost of replacing them today.

• The Claim Impact: If a property fire, theft, or severe water damage occurs, you could end up paying thousands of dollars out of pocket to cover the shortfall between your policy limit and actual replacement costs.

Beware of the Co-insurance Clause

Many commercial property policies include a co-insurance clause (typically requiring you to insure your property for at least 80% or 90% of its true replacement value).

If rapid tariff-driven cost increases cause your insured values to drop below this required percentage, insurance companies may apply a penalty to your claim payout—even for partial losses.

Example: If your business inventory and equipment are worth $500,000 under current tariff-adjusted prices, but you remain insured for $300,000 based on old valuation figures, any claim payout could be reduced proportionally due to underinsurance.

Extended Business Interruption Timelines

If your business relies on specialized U.S.-manufactured machinery or parts, cross-border tariff disputes can lead to supply chain delays and longer repair times.

• Business Interruption (BI) Insurance: Ensures your ongoing payroll, rent, and lost profits are covered while your business recovers from a covered property loss.

• Indemnity Periods: Standard 12-month indemnity periods may no longer be sufficient if sourcing replacement commercial equipment takes longer due to trade bottlenecks. Extending your indemnity period to 18 or 24 months protects your cash flow against trade delays.

Commercial Fleet and Auto Repair Pressures

Commercial auto fleets encounter rising repair expenses due to tariffs on imported replacement components, vehicle electronics, and mechanical parts. Fleet repair cycles take longer. Furthermore, extended repair timelines increase secondary costs such as rental vehicle coverage.

Higher total loss payouts on commercial vehicles inevitably drive upward rate adjustments across upcoming policy renewal cycles.

Practical Steps for Business Owners

• Audit Your Inventory and Asset Values: Review your current equipment, tools, and inventory records to account for inflation and new tariff surcharges.
• Review Your Policy Limits: Ensure your Building, Business Contents, and Equipment Breakdown limits reflect current replacement costs.
• Assess Business Interruption Duration: Verify that your indemnity period provides adequate buffer time for supply chain delays.
• Consult an Independent RIBO Broker: Work with an expert to re-evaluate your commercial coverage without overpaying.

Protect Your Business with AiA Insurance Brokers Ltd

Navigating economic updates and trade changes requires proactive insurance planning. At AiA Insurance Brokers Ltd, our registered insurance brokers work with Canada’s top commercial insurers to audit your policy, update asset valuations, and ensure your business remains protected.

Contact AiA Insurance Brokers Ltd today or visit aiainsurance.ca for a commercial policy review.

Official Sources & References

• Department of Finance Canada: List of U.S. Products Subject to Counter-Tariffs (September 8, 2026)
• Government of Canada: Canada Announces Targeted Countermeasures and Substantive Support
• Canada Border Services Agency (CBSA): Customs Notices regarding Countermeasures and Surtaxes