Why tariff deals, travel plans and income gaps matter for P&C pros

After roughly six months of on-again, off-again tariff deadlines with countries worldwide, the U.S. has signed a few trade deals.

This comes as Prime Minister Mark Carney admitted during the run-up to a meeting with provincial premiers in Huntsville, Ont. that Canada will likely face “some tariffs” as part of a pending trade deal with the U.S.

But with the Aug. 1 date for a trade agreement looming, Canada’s P&C insurers and brokers may at least soon have some specifics about which risks they’ll need mitigate for clients.  

The most significant deal signed so far involves Japan. Under it, that country will face a 15% reciprocal tariff of goods entering the U.S. The deal also opens Japan’s markets to U.S.-produced rice and other farm products, as well as cars and trucks. The new baseline tariff is good news for Japanese automakers as it removes an existing 27.5% tariff, but the deal retains a 50% levy on Japanese steel products entering the U.S.

The White House also announced trade agreements with Indonesia and the Philippines, both of which will pay levies of 19% on exports to the U.S.

Related: Ways for specialty insurance clients to navigate U.S. tariffs

A deal with the European Union is expected next, with the U.S. said to be entertaining a 15% flat levy on goods from countries in the bloc. Negotiations have gone on for months. Currently the U.S. has 50% tariffs on steel and aluminum from the EU, 25% on cars and 10% on other imports.

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Investment markets express hope that 15% will become the new tariff baseline. While that’s higher than previous levies for some countries, it’s well below many of the wild numbers thrown around since January. Problem is, tariffs can also slow U.S. economic growth and spur inflation by making purchases for American customers more expensive, as Goldman Sachs economist David Mericle explains in a podcast. And slower U.S. growth will be a negative for Canada, regardless of how coming trade negotiations pan out.

Meanwhile, U.S-based Alcoa CEO Bill Oplinger has asked aluminum to be carved out from the 50% tariff imposed on Canada’s metals sector, noting that aluminum imports from the firm’s Quebec plants support numerous downstream jobs in the U.S.

Related: Brokers say tariffs are affecting co-insurance terms in business policies

And the trade spat is showing negative consequences for Canada’s transport sector. CN’s most recent quarterly statement says revenues dropped 1.3% on a year-over-year basis, due to declines in freight transport. Further, the value of goods moved are lower with less petrochemical, metal and forest products riding the rails south. For Alberta’s petrochemical sector, a ray of light shone during the Jul. 21-22 premiers’ meeting during which leaders of Alberta and B.C. expressed willingness to at least discuss how a pipeline bringing oil to west coast ports could be built.

Meanwhile, Canada’s telecom companies say reduced travel to the U.S. is cutting into revenues earned by roaming plans. These announcements come as new Statistics Canada data show return trips by Canadians coming back from the U.S. by air are down 17.4%, and 37.4% by car.

Related: Can insurers’ investment portfolios handle U.S. tariff shock?

Less uplifting is a Jul. 16 report from Statistics Canada showing the wealth gap between Canada’s highest and lowest income earners (defined as the difference in disposable income between the top 40% and bottom 40% of households) hit a record. “This gap reached a record high of 49.0 percentage points in the first quarter of 2025,” StatsCan says in its report. “The income gap increased each year following the onset of the COVID-19 pandemic. A low of 43.8 percentage points was recorded in the first quarter of 2021.”

Falling household incomes at the low end of the spectrum can, in some cases, reduce demand for certain personal lines coverages – including auto and home policies.

Phil Porado

Phil, an award-winning journalist with over 30 years of experience in financial topics, has been managing editor of Canadian Underwriter for more than three years.