In 2025, a new category of risk became real for thousands of US importers and exporters: the risk that their own government would restrict or cut off trade with a key trading partner. Not a supplier failing to deliver. Not a buyer failing to pay. The government itself — through tariffs, trade restrictions, or full trade cutoffs — disrupting a supply chain that took years to build.
Most of these businesses had some form of insurance. None of it covered this.
What trade credit insurance actually covers
Trade credit insurance — the most common risk management tool for importers and exporters — protects against a specific event: your buyer defaults on payment. You shipped the goods, the buyer received them, and then the buyer didn't pay.
This is a real and significant risk. For businesses with concentrated receivables exposure, trade credit insurance is often essential. But it protects the demand side of the transaction — your customers paying you.
It does not protect the supply side. When your government imposes 25% tariffs on goods from your sourcing country, your trade credit policy is silent. When the US restricts or suspends trade with Spain, your existing coverage doesn't respond. The product is simply not designed for this type of event.
What political risk insurance covers — and what it doesn't
Political risk insurance was designed for a different era of trade risk: a US company investing in or trading with an emerging market, where the concern was that the foreign government would expropriate assets, impose capital controls, or default on sovereign obligations.
This is valuable coverage for businesses with exposure to unstable foreign governments. But it doesn't address the risk that's actually causing harm for US importers today: a stable, developed trading partner — Spain, France, Canada — being subject to US-imposed trade restrictions.
The risk isn't the foreign government acting unpredictably. It's the US government acting in a way that disrupts trade with a stable, predictable counterpart. Political risk insurance wasn't designed for this and doesn't cover it.
The gap: who covers supply-side trade disruption?
Trade Disruption Insurance (TDI) does exist as a product category. It's available from Lloyd's syndicates and a small number of specialty insurers. It can cover supply-side disruption — including government-imposed trade restrictions.
There are two problems. First, TDI has historically been available only to large enterprises — Fortune 500 companies with sufficient premium volume and legal resources to negotiate bespoke policy language. Second, capacity is extremely limited. The number of underwriters willing to write TDI has not kept pace with the explosion in demand since 2025.
For a mid-market importer with $10M in annual trade volume, TDI is either unavailable, unaffordable, or both.
The financial protection alternative
Exchange-traded financial instruments offer a different approach to the same problem. Rather than a claims-based insurance process, protection is structured around observable triggers: if tariffs on goods from Country X reach Level Y, the instrument settles automatically based on official published government data.
There is no claims process. No adjuster reviewing whether your loss qualifies. No negotiation over causation. The trigger is objective and publicly verifiable. When conditions are met, funds are delivered.
This approach is structurally different from insurance — it is a financial instrument, not an insurance policy — but it addresses the same underlying business problem: protecting against financial losses caused by government trade actions.
The instruments are CFTC-regulated and traded on regulated venues. Customer funds are held in segregated accounts. The cost is disclosed upfront and known before any commitment is made.
Who this is for
Financial protection for trade disruption risk is designed for mid-market businesses — typically importers and exporters with $5M or more in trade volume affected by tariffs or country-level disruption risk.
The sharpest use case today is businesses with concentrated supply chains. A wine importer sourcing 70% of its volume from Spain. A food distributor whose primary olive oil supplier is in Andalusia. A ceramics importer whose entire product line originates in a single EU country.
These businesses can't diversify overnight. Finding an alternative supplier in a different country takes months of qualification, inventory build, and logistics restructuring. Financial protection provides immediate coverage during that transition — or a permanent hedge if the supply chain concentration is intentional and strategic.
The bottom line
Trade credit insurance protects against your customers not paying. Political risk insurance protects against unstable foreign governments. Neither was designed for the dominant trade risk of 2025–2026: your own government restricting trade with your supplier's country.
That gap is real. It is not covered by existing insurance products available to mid-market businesses. Exchange-traded financial instruments — CFTC-regulated, automatically settling, cost-disclosed upfront — are the practical alternative.