By Matt Bigham
The U.S. government’s steel and aluminum tariffs recently went into effect, and in response, some of our trading partners have implemented retaliatory tariffs on U.S. goods. Specifically, retaliatory tariffs from China, India and Turkey will directly impact the agricultural market and have the potential to put California’s specialty crop industry at a competitive disadvantage.
In 2016, the state exported more than $2 billion in agricultural products to China—many of which Western Growers’ members grow, such as tree nuts, citrus, stone fruit and grapes. Almonds, alone, were hit with a 15 percent retaliatory tariff in April in response to the U.S. tariffs on steel and aluminum, and then an additional 25 percent tariff in July due to the U.S.-China conflicts surrounding intellectual property.
Unfortunately, these tariffs will make U.S. crops more expensive overseas, reduce the demand for specialty crops and, ultimately, have a damaging impact on farmers’ bottom lines. The agricultural industry must take steps to protect itself. To keep business sustained in a time of an uncertain trade environment, growers may look to doing business with partners they have not yet worked with because they are not able to sell to their typical customers. International trade credit insurance can protect you in business ventures with unfamiliar clients.
International trade credit is a type of insurance that protects your business from the risk of non-payment of invoices. Non-payment can be a result of a customer going bankrupt or simply because a business has insufficient funds to pay its debts. Credit insurance mitigates risk of insufficient payment of products sold so if your customer cannot pay you, you will still get up to 90 percent of your money. This means your invoices are covered!
In addition to mitigating risk, trade credit can also help your business grow. Here are four main reasons to consider investing in an international trade credit policy:
• To protect against non-payment of a debt
• To offer terms to new customers
• To increase payment terms to existing customers
• To explore higher risk opportunities
International trade credit insurance has a variety of services and offerings related to foreign commerce to go along with its core function of insuring your accounts receivable. While it can be rewarding for some businesses, it is also a good idea to be thorough when considering to purchase this type of insurance.
Western Growers Insurance Services has trained representatives who can walk you through the process of deciding if international trade credit is right for your business. We will conduct an in-depth assessment to see if it is a good fit for your company, detail what options best serve your organizational needs, navigate you through the purchase process, ensure that your coverage is properly in place and help you seamlessly integrate it into your daily operations.
For more information on how to utilize international trade credit insurance, feel free to contact me at email@example.com or (602) 757-7869.
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