How to advise your clients during Trump’s 90-day tariff pause

Commercial brokers should encourage clients to take advantage of U.S. President Donald Trump’s 90-day pause on reciprocal tariffs to take a long, hard look at their supply chains, do scenario testing, and brush up on their business continuity plans, says Marsh Advisory’s global head of multinational clients.

“The next 90 days are absolutely critical, in my view,” James Crask said Wednesday on the Marsh McLennan webinar, Navigating geopolitical risk and uncertainty. “I’ve been advising clients with my teams globally to take three really important steps right now to manage tariffs.”

The first is for clients to start assessing their risk exposures by doing in-depth, upstream supply chain mapping.

Crask said most clients are doing a risk assessment of only their top one or two main suppliers. But clients can gain a better understanding of how tariffs may affect them if they broaden their analysis to cover organizations further down the supply chain.

“To put that into context, think of an organization that might be manufacturing something in a European country, and it has a key supplier in the U.S., and it’s buying some goods from the U.S.,” says Crask. “So, it knows who its Tier 1 supplier is. It can quantify that potential exposure.

“But what many organizations struggle with is understanding the Tier 2s, the Tier 3s, and deeper into the supply chain. So, what if that U.S. supplier had a bunch of Canadian and Mexican suppliers supporting them?

“There are tariff costs hidden from view, and tariff risks more generally. And the point is, without that quantification, you can only react to what’s happening [with tariffs], rather than getting yourself on the front foot. The question I think we need to ask ourselves is, ‘Do we want to be a passenger in this vehicle, or do we want to be in the driving seat, trying to take our organizations…forward?’ We all know where we’d rather be.”

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Picking up the phone to call each individual vendor in your supply chain to find out who their suppliers are is a laborious, time-consuming process, and could take years, says Crask. Plus, vendors in the supply chain may be reluctant to disclose their risks to third parties, or they might not even know their own risks.

AI technology now allows clients to determine the risks from each of their suppliers at every stage of the delivery of goods or parts. For example, Sentrisk, a risk management tool created by Marsh and Oliver Wyman, maps upstream supply chains in 72 hours. The risks it has modelled for suppliers include natural hazards, geopolitical, climate-related and reputational risks, as well as structural risks like single-supplier dependencies and geographic concentration.

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Scenario-testing is the second thing a company should do during the 90-day pause, Crask says.

And these scenarios should go beyond just assessing the impact of the well-publicized cost increases caused by tariffs, Crask says. They should also account for how tariffs may affect marketplace behaviors and competition.

“We could see products being dumped in markets in which they perhaps wouldn’t normally be sold,” Crask cautions. “So, [because of tariffs], it becomes too expensive to sell goods to consumers in Market A, so they switch to Market B.

“From a consumer point of view, that clearly could be quite a benefit, because it reduces the potential cost of those goods for consumers. But if you are a competitor operating in that market already, with a supply chain that sets your price at a different level to the one that those goods are entering the market with, that clearly causes some potential issues.”

Another risk for commercial clients is the potential for deals by competitors to reduce or deny your clients’ access to goods that are critical to their supply chains, Crask says.

“We’ll see more competition for suppliers that are less impacted by the proposed tariff. We may see companies looking to lock out competitors by pre-purchasing [suppliers’ goods] or agreeing to buy for a longer period of time, in order to capture more of the market.”

And finally, it’s worth revisiting business continuity plans.

“You know you all used it during COVID,” Crask says, “so get it back off the shelf. Review it, make sure it’s up to date. Make sure your colleagues know what to do in the event of disruption.”

Editor’s Note: This story has been amended to reflect the correct spelling of the speaker’s last name. CU apologizes for the error.

David Gambrill

David has twice served as Canadian Underwriter’s senior editor, both from 2005 to 2012, and again from 2017 to the present.