Canadian Exporters Turn to Trade Credit Insurance Amid Trump’s Tariff Uncertainty
Ottawa (Reuters) – As trade tensions escalate due to U.S. tariffs under U.S. President Donald Trump’s influence, Canadian exporters are increasingly turning to trade credit insurance to cushion potential financial blows. This shift marks a notable change in strategy for businesses that have traditionally relied on the stability of North American trade agreements.
Trade credit insurance, a financial tool more commonly used in European markets, protects businesses against non-payment caused by the insolvency of foreign buyers. In Canada, however, the uptake has been historically low—insuring less than 1% of outbound payments, despite these transactions representing 40% of exporters’ revenue. With tariffs once again back in the spotlight, interest in this niche insurance product is experiencing a steady uptick.
For decades, Canada’s reliance on U.S. markets—accounting for over 75% of its exports—has not warranted widespread credit insurance due to the predictability offered by free trade agreements. But the resurgence of protectionist policies, particularly Trump’s tariff threats and subsequent implementation on Canadian goods like steel, aluminum, and automobiles, has shaken that confidence.
Although still a small portion of the market, inquiries about trade credit insurance have risen by 10% since January, companies are now seeking new ways to secure their finances as tariff-driven uncertainties ripple through supply chains, shrink margins, and prompt strategic reevaluations.
The Export Development Canada (EDC), the country’s leading provider of trade credit insurance, has been tasked with managing a government fund of C$5 billion to support businesses directly impacted by the U.S. trade actions. While uptake remains limited—with only 7,000 to 10,000 export firms currently insured—industry players anticipate continued growth as economic pressure intensifies.
Insurers warn that as U.S. bankruptcies rise, the risks for Canadian firms will increase in parallel. By adopting trade credit insurance, exporters hope to minimize exposure to such financial shocks.