US President Donald Trump says he imposed prices to encourage business in the country. During the 2024 electoral campaign, he launched the idea Out of 2,000 percent prices, which he said, would quickly convince companies to move their operations in the United States.
But the president’s own policies quickly make dangerous affairs in his own country. Until recently, companies only needed insurance against political risks in non -Western countries. Now they discover that they may also need such protection in the United States. Will firm takers begin to offer political risk insurance – until the field of risky countries of Azerbaijan in Zimbabwe – in America?
US President Donald Trump says he imposed prices to encourage business in the country. During the 2024 electoral campaign, he launched the idea Out of 2,000 percent prices, which he said, would quickly convince companies to move their operations in the United States.
But the president’s own policies quickly make dangerous affairs in his own country. Until recently, companies only needed insurance against political risks in non -Western countries. Now they discover that they may also need such protection in the United States. Will firm takers begin to offer political risk insurance – until the field of risky countries of Azerbaijan in Zimbabwe – in America?
“The higher the price, the more likely it is that the company will enter the United States and build a factory,” Trump said In an interview in October 2024. The president repeatedly expressed his love for prices. During the few dizzying weeks since his return to the White House, he not only announced scanning prices in Canada and Mexico (then temporarily brought them back, reintegrated and suspended them), but at the end of February, he said It would impose 25% of general prices on the goods of the European Union.
So far, so conventional. But Trump does not impose prices in the traditional way, to protect national producers exposed to strong competition from foreigners. As he has demonstrated unequivocally with omnibus prices on Canada and Mexico, as well as China, Trump considers prices as a punishment against the countries of his choice.
“President Trump takes daring measures to hold Mexico, Canada and China responsible for putting an end to illegal immigration and stopping toxic fentanyl and other drugs to sink into our country,” said the White House in a statement announcing the prices on February 1 and concerning the prices of the EU, Trump claimed The block was “formed to screw the United States”.
What countries, and what sectors will be the next to receive the pricing punishment of America? It is impossible to predict. It could be countries and industries that are currently going beyond American competitors, but it could also be completely different. No wonder companies do business with and in the United States care – if concerned about the fact that they are starting to think about political risk insurance, as I have learned conversations with insurers and other executives.
These insurances cover societies against politically linked risks, in particular expropriation and war. In 2021, for example, a company providing food for the American army in Afghanistan Payment requested On his insurance after the Taliban seized his warehouse at Bagram air base. The saw in the Arab Spring many complaints. As a general rule, companies only need political risk insurance in non -Western countries: in liberal democracies, there is little risk of civil war or unjustified expropriation. With conflicts, instability and authoritarian behavior that developed worldwide, at the beginning of 2024, 96% of multinationals had added new political risk management capacities, said World Insurance Broker WTW in his 2024 Risk survey. Some 72% underwent political risk loss.
And now political risk is increasing in the United States. The government’s self -assisted cleaning by the new government ministry of the government means that companies face the risk of canceling contracts for political reasons – and not just future but payment for existing contracts. USAID entrepreneurs already owed $ 2 billion by the United States government and will only be paid thanks to close 5-4 Decision of the Supreme Court March 5.
Companies abroad also face the risk that Trump targets them to chastise their origin governments. In 2021, China did exactly this for Australia: after the Minister of Primary, Scott Morrison, called for an independent investigation into the origins of Covid-19, Beijing imposed prices until until 218% on Australian wine. Now Trump openly says he wants to go after Canadians and Europeans.
This is not the only American political risk facing businesses. If companies were to negatively attract the attention of Trump’s advisor, Elon Musk, he could also attack them on X, on which he has 220 million followers and where he regularly attack Those he considers adversaries, whether it are individuals, government services or foreign officials. (“Be calm, little man”, he tweeted In response to a position by Polish Foreign Minister Radoslaw Sikorski.) This would cause reputation damage to attacked companies – and to certain financial damages.
Companies hope that silence will save them. “The leaders of management alarmed by prices that could harm their businesses are in silent”, New York Times reported On March 6, referring to the silence of American companies on the actions of the Trump administration with which its leaders disagreed.
It is a political risk of an entirely new type, at least in a Western democracy. In the rarefied world of the arts, this reality has a similar effect. The European Ballet School has already canceled A summer program in Las Vegas, citing “the current world situation of political instability, with several negative effects on our planned programs”.
And then there is the risk of riots and civil agitation with political motivation. “Companies saw on January 6, and it is not unreasonable to suspect that such events could happen again,” said an insurance director. “They want to make sure they have this insured.”
But even if the subscribers had to start offering political risk insurance for operations linked to the United States, coverage would be extremely difficult. Insurance depends on the capacity to model the risks, and it is almost impossible to predict – without quantifying – the policies that Trump will introduce and what effects, planned or involuntary, they can have. And, as the executive noted, “certain actions of the American government can affect American companies operating abroad. What we hear from our customers is a concern for the actions of the American government affecting their operations abroad. And foreign governments can also decide to retaliate against these actions by the United States government. “
Firm takers have no obligation to ensure risks that they consider excessive or too unpredictable. In countries like Brazil or Iraq, for example, the risks can be modeled and are not so immense as to subscribe to a crazy race. But insurers have practically underrated political risk in China, where the authorities have continued in recent years Bath And Jack Ma’s Alibaba Empire To cross often invisible political lines. Political risks no longer ensure in Russia, and they coverage finished In Ukraine, weeks before the invasion of Russia.
It also limits Trumpian’s dreams to open business with autocracies. The United States under Trump wishes to establish closer trade links with Russia. After meeting the Russian Foreign Minister Sergey Lavrov Times reported. But political declarations are not enough to convince companies.
Russia is therefore volatile that without political risk insurance, only the rarest Western society would dare to invest there. In fact, Russia remains too risky, even for most subscribers. “Unless people are starting to feel completely confident about Russia, I don’t see the market change,” said insurance director. “They will need time and confidence.”
The most fundamental principle of business is that companies like normality and predictability, and this also applies to firm takers. Yes, they are in the field of risk, but they will not be able to risk the risk that they cannot assess. And even if Trump thinks that he acts in the interest of the American economy by punishing various foreign entities, his impulsive actions are likely to convince companies that the United States is no longer open to business.