When Washington Shifts, So Does Your Risk
On April 5, a sweeping new U.S. tariff policy took effect — a flat 10% duty on nearly all imports, with even steeper increases for over 50 countries. While aimed at correcting trade imbalances and supporting domestic industry, the real-world impact for federal contractors has been immediate and challenging.
In a recent article published by Federal News Network, Randy Sadler of CIC Services discusses how federal contractors, many of whom operate on razor-thin margins, are now stuck between a rock and a hard place. Fixed-price contracts signed months or years ago didn’t account for sudden increases in material costs, especially those driven by policy shifts like tariffs. These changes can’t always be renegotiated, and they’re rarely covered by traditional insurance.
In FY2023, the U.S. government awarded over $750 billion in federal contracts. That figure paints a picture of stability — but behind the scenes, contractors are being forced to absorb policy-driven cost spikes without relief. Unlike operational failures or supply chain hiccups, the risk here is political and external — and it’s just as financially damaging. From construction to defense, many sectors now face margin pressure not from competitors, but from Capitol Hill.
Traditional commercial insurance doesn’t cover regulatory whiplash. Political risk insurance exists, but it’s built for multinational operations — not domestic contractors. That leaves a blind spot in the risk management plans of many companies.
What’s needed now is a mindset shift. Contractors must go beyond compliance and start building true resilience — financial, operational, and strategic. That means asking not just “How do we react?” but “What are we missing?” and “How do we plan for what’s next?”
Government contracts may promise predictable revenue, but in today’s policy-charged environment, predictability is relative. Companies that thrive will be those that treat policy risk not as an anomaly, but as a strategic consideration. Because in this new era, the most dangerous risks are the ones no one saw coming.
Read the full article here to see why traditional insurance may no longer be enough. If your business relies on federal contracts and you’re feeling the pinch from rising tariffs and policy shifts, it’s time to explore smarter risk strategies.