Ongoing tariff uncertainty gives rise to D&O coverage questions

President Trump has made trade policy the centerpiece of his second term, unleashing a flurry of new tariffs on imports and prompting retaliatory levies from U.S. trading partners, punctuated by starts and stops and legal challenges that have generated significant uncertainty for businesses. Amid this uncertainty, companies face mounting litigation and regulatory perils arising out of tariff compliance issues and financial disclosures regarding the impact of tariffs on their finances and operations.

As businesses and senior company leaders navigate this fraught environment, it’s vital that they understand how insurance coverage may respond to these risks.

Tariff confusion

With trade policy a priority for his second administration, President Trump has imposed new tariffs on several American trading partners since returning to office. Many countries have responded with their own levies on American exports.

The rollout of these tariffs has been complicated (opens a new window)as the president has gone back and forth on many individual tariffs. For example:

• On April 2, President Trump announced a vast series of tariffs (opens a new window), including a 10% baseline tariff on all imports from nearly all countries to take effect April 5 and higher rates for many more nations effective April 9, only to suspend the additional tariffs for most countries through July 9 (opens a new window). The White House later extended this pause until August 1 (opens a new window).

• In the weeks since, the U.S. has reached trade agreements with the EU, Japan, and South Korea, among other nations.

• On July 31, President Trump announced that talks with Mexico — America's largest trading partner — over a new trade deal would be extended 90 days, which for now prevents higher tariffs on Mexican goods originally announced in April from taking effect.

• On the same day, the president announced a fresh round of tariffs on dozens of countries (opens a new window), set to take effect August 7.

Meanwhile, in late May, the Court of International Trade ruled that President Trump does not have authority under the International Emergency Economic Powers Act to impose tariffs on other countries (opens a new window). The Court of Appeals for the Federal Circuit has issued an administrative stay of the trade court’s ruling, which maintains the status quo while the administration appeals the decision.

This sequence of events has led to persistent questions about whether, how, and when various tariffs will take effect, how severe they may be, and how they will impact the economy and individual businesses.

Litigation and regulatory risk

Facing confusion about how the tariff landscape will ultimately look, businesses have been scrambling to address both tariff compliance and financial disclosure concerns. A May 2025 memo (opens a new window) signaled the DOJ’s intent to pursue both civil and criminal actions against businesses and individuals for tariff and customs noncompliance.

The Department of Justice (DOJ) has subsequently intervened in at least one qui tam action alleging False Claims Act (FCA) violations brought by a whistleblower. The FCA prohibits the submission of false claims to the government and allows for actions by both the federal government and private citizens acting as whistleblowers.

The Biden administration previously used the FCA, and qui tam actions specifically, to garner significant recoveries from businesses they alleged had engaged in fraud. For the year ending September 30, 2024, the DOJ reported securing $2.9 billion (opens a new window) from settlements and judgments arising out of FCA investigations, including $2.4 billion from qui tam actions.

In the case in which the DOJ recently intervened — United States ex rel. Joyce v. Global Office Furniture, LLC (opens a new window) — the government alleges that a furniture company and its owner violated the FCA “by knowingly and improperly underpaying customs duties owed on imported office chairs.” The company sells furniture manufactured in China, a prominent target of President Trump’s new tariffs.

Corporate shareholders, meanwhile, could begin to file their own lawsuits alleging violations of federal securities laws premised on companies’ misrepresentation of tariffs’ financial and operational impacts in filings to the Securities and Exchange Commission (SEC). Shareholder derivative suits could also allege tariff-related mismanagement and/or breach of fiduciary duties by directors and officers.

Insurance implications

Directors and officers liability (D&O) insurance can protect board members and senior company leaders from many of these risks, and provide balance sheet protection for companies.

D&O insurance, for example, can be triggered in the event of securities class action and derivative suits. D&O insurance can also respond to regulatory activity, such as investigations and enforcement actions by the DOJ — including, depending on circumstances, FCA claims — along with investigations and actions by the SEC and other federal and state agencies. Some policies may also respond to qui tam actions brought by private individuals.

Risk professionals should consult with their insurance advisors about whether and how qui tam actions may trigger D&O coverage and/or certain policyholder requirements. One notable issue policyholders and their advisors should focus on is policy language regarding notice to insurers. As qui tam actions are often filed under seal, a company could be named in an action without being immediately aware of it. As such, risk professionals and brokers should seek to ensure that policies’ notice requirements are specifically tailored to address potential qui tam actions.

Risk professionals should also work with their brokers to ensure policies have the broadest terms and conditions and adequate limits to respond to shareholder and regulatory actions.

For more on the insurance and risk management implications of new tariffs introduced in 2025, read New tariffs, new risks: How businesses can respond (opens a new window).