A quieter corner of the insurance world has seen a surprising boost from former President Donald Trump’s trade policies, but a looming Supreme Court decision could shake things up. The case at hand questions whether the tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were legal. The court’s ruling, expected by February 20, could impact billions tied to customs bonds, an area that has grown significantly in recent years.
Customs bonds are a type of surety insurance that guarantees payment of duties and taxes on goods imported into the U.S. These bonds act as a safety net, ensuring that U.S. Customs and Border Protection gets paid even if the importer does not meet their obligations. The size of the bond depends on the value of imported goods and the expected duties over a year. Typically, premiums are a small percentage of the bond amount.
When Trump’s administration raised tariffs — with some rates jumping to 25% or higher — bond requirements shot up. Companies that once needed bonds close to $50,000 found themselves needing tens or even hundreds of millions of dollars in coverage. Some businesses faced bond obligations that increased multiple times over; one carmaker saw its bond needs grow by more than 550%. For insurance companies, this surge has been a welcome source of extra premiums and new business.
However, the tariff hikes also brought challenges. U.S. Customs has sent many more “insufficiency notices” to importers, warning that their current bonds don’t cover the increased duties. By mid-2025, insufficiencies neared $1.5 billion, a big jump from $546 million in 2024. This has especially affected smaller and mid-sized businesses. To reduce risk, insurers are asking many importers to provide extra collateral, which can sit with the surety company for around 10 months without earning interest or being available to the importer.
Specialty insurers like RLI, CNA, Chubb, Liberty Mutual, Skyward, and Palomar Specialty have benefited from this situation. Their customs bond business has grown as they help importers handle higher tariffs and stricter credit checks. This demand has helped balance out weaker results in some other sectors influenced by government rules, like parts of the renewable energy market.
But all of this might change if the Supreme Court rules against the use of IEEPA for these tariffs. If that happens, importers might seek refunds for duties paid and push for lower bond limits, premiums, and collateral requirements. Insurers would face a big task, needing to adjust accounts, recalculate risks, and handle many requests for collateral return. Since the process to review and return collateral can take weeks, a wave of such requests would be a significant burden.
Still, even if the court strikes down these tariffs, trade-policy risks won’t disappear. The Trump administration has indicated it may use other laws to bring back tariffs if needed. So, importers and insurers could still face new, different rules instead of going back to how things were before.
For now, surety insurers involved in customs bonds find themselves both winners of past trade policies and among the first to feel any impact if those policies are overturned. The coming Supreme Court decision will be one to watch closely for anyone involved in international trade and insurance.