At the heart of Trump’s proposed agenda lies a sweeping expansion of tariff – beginning with an unprecedented 10% blanket tariff on all imports and rising to as much as 60% on Chinese goods.

While headlines focus on political drama, astute businesses are reading between the lines: these tariffs could trigger a rapid surge in cross-border insolvencies, disrupting supply chains and squeezing already thin margins.

Early Warning Signs Are Flashing – Act Now

The mere announcement of new tariffs has already shaken global business confidence. Multinationals, especially in manufacturing, logistics, and e-commerce, face imminent and severe risks from abrupt cost escalations and supply chain disruptions. If these tariffs become reality, the impact on cash flow, profitability, and contractual obligations will not be a future problem—they will become immediate and potentially devastating.

We have seen this scenario before, but now the stakes are higher. The Covid pandemic forced countless manufacturers and exporters across multiple sectors into administration, wreaking havoc on global supply chains and exposing critical weaknesses. Today, with unprecedented global debt levels and tightening credit conditions, the next crisis could prove significantly more catastrophic and far-reaching.

Cross-Border Complexity: No Business is Safe

Unlike previous downturns, this crisis will have distinctly international dimensions. A tariff imposed in Washington could swiftly sink suppliers in Ho Chi Minh City, subcontractors in Penang, or distributors in Melbourne. The more interconnected your operations, the more exposed you become. Insolvency practitioners globally anticipate increased multi-jurisdictional complexities—expect contentious battles around recognition, enforcement, and cross-border coordination. Courts in the US, Singapore, and Hong Kong are already handling increased cross-border restructuring activity—and that is before the tariffs even take effect.

Jurisdictions to Watch

With Trump’s recent tariff announcement, expect distressed companies to flock to jurisdictions with clearer insolvency frameworks. Singapore, with its adoption of the UNCITRAL Model Law and creditor-friendly restructuring environment, is well positioned to handle significant inbound restructuring cases from Asia-Pacific. The US will see a rise in Chapter 15 filings, while the UK’s post-Brexit regime faces a critical test.

Prepare for a surge in strategic forum shopping, aggressive pre-pack restructurings, and rapid asset tracing, particularly across Asia-Pacific, the origin of many US-bound supply chains.

Commodity Chaos and Creditor Risk

Commodity traders and intermediaries dealing in metals, energy, and agriculture are already skating on thin ice due to volatile pricing and liquidity constraints. New tariffs will exacerbate payment delays, contract defaults, and credit insurance claims—potentially triggering a wave of insolvencies. These businesses, often lightly capitalised and highly leveraged, could quickly buckle under the pressure.

For creditors, especially those offshore or further down the supply chain, the risk is real and immediate. Late payments are concerning enough, but insolvency proceedings filed in unfamiliar jurisdictions can leave creditors unprepared and unable to enforce their rights.

Critical Questions Every Business Must Consider:

• Have you clearly identified the jurisdictions of incorporation for your key counterparties and determined the governing law of your contracts?
• Do you have robust processes in place to quickly enforce contractual rights or effectively engage in cross-border insolvency proceedings?
• Are you adequately assessing your exposure to sectors particularly susceptible to insolvency risks—such as commodities or international trade?
• Have you established relationships with experienced local legal and insolvency professionals who can respond rapidly if insolvency actions occur abroad?

 Act Now, or Pay the Price

Cross-border insolvency is not merely a legal issue—it is a direct threat to your bottom line. With geopolitical shocks and tariff changes looming, hesitation risks catastrophic losses. Speak to your Hall Chadwick advisers now. In cross-border insolvency, prevention is not just better than cure – it is the only real defence.