Increased risks for many sectors

More and more sectors are at risk due to the trade war. Before the Covid crisis, one-third of sectors were considered particularly exposed to risk, compared to half today. The three European sectors most exposed to risk are automotive, textiles, and metallurgy.

Johan Geeroms, our Director of Risk Underwriting Benelux, says: "It's not just about Trump's unpredictable tariff policy. The ongoing trade conflicts between the US, China, and other major powers are also causing permanent uncertainty and changes in global supply chains. We are seeing companies adapting to this new reality. For example, more and more US imports from China are being diverted to countries such as India and the ASEAN region. Companies are looking for ways to circumvent tariffs and sanctions, but many sectors are facing increased operating costs and a shortage of production capacity."

According to Johan Geeroms, supply chains are increasingly influenced by geopolitical changes. "Take the recent summit between Xi, Modi, and Putin in Beijing. These countries are stepping up their trade and mutual cooperation. This is disrupting existing global supply chains. At the same time, Europe is strengthening its trade relations with other major powers. The Mercosur agreement with the four largest countries in Latin America is one example. This affects trade in agricultural products and rare metals. All these developments are not only changing trade routes, but also determining which regional sectors are becoming more vulnerable or stronger."

Our latest report shows that only 9% of sectors worldwide are currently considered low risk. Before the pandemic, this percentage was significantly higher, at 15%. Allianz Trade distinguishes between four levels of risk for sectors: low, medium, sensitive, and highly sensitive. Asia emerges as the safest region in the Allianz report, while trade with Latin America and Eastern Europe presents the highest risks. The vast majority of sectors in Europe are considered medium or high risk.

Margins in many sectors in Europe are under significant pressure. Supply chain disruptions, increased transport and import costs certainly play a role in this. But so do tighter regulations and rising costs, for example for energy, raw materials, and labor. Companies in capital-intensive, cyclical sectors are finding it particularly difficult to pass on the full cost increases.

In these uncertain times, with new risks emerging, it is essential to protect your business against risks related to your sector. A trade credit insurance protects you against the risk of non-payment and bankruptcy of your customers, allowing you to grow your business with confidence.