Suits Arise as Tariff Questions Raise D&O Risk
•February 16, 2026
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Companies Mentioned
Why It Matters
Tariff‑driven litigation can trigger costly D&O claims, affecting both public and private firms' financial stability and insurance costs. Effective disclosure and appropriate policy language are therefore critical for corporate risk management.
Key Takeaways
- •Tariff-related securities suits rose despite overall class-action decline
- •D&O insurers see limited pricing impact; coverage remains competitive
- •Accurate tariff disclosures crucial to avoid shareholder litigation
- •Private firms face higher regulatory risk under False Claims Act
- •Policy language will determine coverage for tariff-driven claims
Pulse Analysis
The resurgence of trade‑policy volatility under the former Trump administration has transformed tariffs from a fiscal tool into a litigation catalyst. While the Supreme Court is poised to clarify the legal boundaries of tariff implementation, companies are already confronting shareholder lawsuits that allege misrepresentations of tariff exposure. Cases against Dow, CarMax and Tronox illustrate how investors are scrutinizing management’s ability to forecast macro‑economic headwinds, turning tariff‑related risk into a boardroom agenda. This shift signals a broader trend where trade disputes intersect with securities law, expanding the scope of potential D&O claims.
Despite the uptick in tariff‑centric suits, the directors‑and‑officers (D&O) market remains largely flat. Insurers report that pricing pressure is muted because actual claim frequency is still low, and most policies continue to cover traditional securities‑fraud allegations. However, the devil lies in the policy language: exclusions for government investigations or false‑claims Act actions can limit coverage, especially for private firms that historically rely on broader D&O protection. As a result, underwriting teams are emphasizing precise wording and risk‑adjusted premiums to balance competitive pricing with the emerging exposure.
For corporations, the pragmatic response is twofold: strengthen internal modeling of tariff scenarios and elevate the transparency of public disclosures. Robust financial controls enable executives to answer analyst questions without overpromising, while detailed filings reduce the likelihood of shareholder derivative actions. Legal counsel should routinely review D&O contracts to confirm that tariff‑related misstatements fall within covered perils. By aligning risk‑management practices with insurance safeguards, firms can mitigate the financial fallout of trade‑policy swings and preserve board confidence in an unpredictable regulatory environment.
Suits arise as tariff questions raise D&O risk
Securities class-action lawsuits are emerging as uncertainty and fallout from the Trump administration’s tariff policies increase risks for directors and officers.
While a pending Supreme Court ruling will likely clarify some of the legal uncertainty around tariffs and whether they can be implemented, shifts in trade policy are expected to persist, making accurate corporate disclosures and scenario planning critical, experts say.
D&O insurance pricing is unlikely to be affected, though, because tariff-related claims so far have been limited and the coverage market remains competitive, they said (see related story below).
Tariffs pose risks to both public and private companies, said Kevin LaCroix, a lawyer and Beachwood, Ohio-based executive vice president at RT ProExec, a division of RT Specialty.
Those risks include regulatory enforcement actions and the possibility of private follow-on litigation, he said.
Tariff-related lawsuits brought by shareholders or other claimants are “a new phenomenon,” Mr. LaCroix said.
Federal securities class-action filings fell to 207 in 2025, down 10.7% from 2024, according to a report issued in January by National Economic Research Associates, a consulting unit of Marsh, formerly Marsh McLennan. But “in what may be a new trend in filings, there were four suits with tariff-related claims and one filing related to visa issues,” the report said.
A case filed last August against industrial chemical company Dow alleged it made misrepresentations regarding its ability to mitigate macroeconomic and tariff-related headwinds, according to the report. In September, a separate shareholder derivative lawsuit was filed against the company’s executives.
Used-car retailer CarMax was the target of a securities suit filed in November alleging the company overstated its long-term growth prospects after an earlier short-term surge in demand driven by anticipated tariffs.
Last September, a suit was filed against Tronox Holdings alleging the chemicals company misled investors about its ability to achieve growth and manage demand for titanium dioxide and zircon products in part because of tariff-related uncertainties.
CarMax said it had “no information to share at this time.” Dow and Tronox each did not respond to a request for comment.
Some industry commentators have used the term “tariff-washing” to refer to situations where companies either overstate their resilience to tariffs or downplay risks in public disclosures.
Tariffs present added risk for directors and officers, particularly for private companies, said Will Fahey, a New York-based managing director in the financial and professional lines practice of Marsh Risk, formerly Marsh.
“All companies, public and private, need to focus on the disclosures they make about how they’re handling tariffs,” he said.
As with artificial intelligence, D&O insurers see tariffs as a potential driver of increased claims in 2026, but overall, securities class actions related to tariffs last year were limited, Mr. Fahey said.
Tariffs have had a greater effect on private companies, leading to bankruptcies and enforcement actions by the Trump administration under the False Claims Act, he said.
D&O policies for private companies provide more coverage than those for public companies for regulatory actions, such as those under the False Claims Act, Mr. Fahey said.
Changes in tariffs create uncertainty and exposure for public companies, which can lead to potential stock drops and legal action, said Lenin Lopez, San Diego-based senior vice president at Arthur J. Gallagher & Co.
“It all comes down to disclosure,” Mr. Lopez said.
Questions will arise during earnings calls, perhaps from analysts seeking to understand the impact of tariffs and how a company is handling them, he said.
“Getting too deep into the weeds may create risk,” while not having accurate answers or internal controls to track these issues also poses significant risk, he said.
In a volatile environment where tariffs can change rapidly, it can be difficult for companies to manage their exposures, said Wayne Imrie, head of London market wholesale executive risks at Beazley.
Transparent disclosure and robust financial modeling are critical, he said. Companies with strong systems and processes are better equipped to handle tariff impacts.
D&O policies generally cover claims related to poor decision-making and lack of diligence but do not cover fraud or intentional misrepresentation, Mr. Imrie said.
Securities fraud class actions and derivative suits arising from tariff disclosures would generally be covered under D&O policies, said Larry Fine, New York-based management liability coverage leader at Willis Towers Watson.
“The good news is that most of these things fall into historic categories. They’re not different in type. We expect any claim that says ‘You misled the market’ would tend to trigger D&O coverage and is likely to be 100% covered for defense and settlement. That’s the bread and butter,” Mr. Fine said.
Companies should be aggressive in looking to their D&O coverage to respond to these types of lawsuits, said Evan Knott, a partner in the Chicago office of law firm Honigman.
“Like anything with insurance coverage, the devil’s in the details. It’s going to come down to what kind of policy language you have,” Mr. Knott said.
Insurers are more likely to raise coverage defenses on government investigations and False Claims Act litigation related to tariffs, said Carrie DiCanio, a partner in the Denver and New York offices of law firm Haynes Boone.
“Coverage for government investigations is more nuanced,” Ms. DiCanio said.
Insurance market ‘largely flat’
The market for directors and officers liability insurance continues to stabilize and remains competitive despite geopolitical tensions and new sources of claims, such as tariffs.
While tariffs and other risks, such as artificial intelligence, are receiving attention, they have yet to materialize into significant claims, said Will Fahey, a New York-based managing director in the financial and professional lines practice at Marsh Risk, formerly Marsh.
“Overall, the D&O market is largely flat going into 2026,” he said.
Insurers have limited room to maneuver in the current phase of the market cycle, said Kevin LaCroix, a lawyer and executive vice president at RT ProExec, a division of RT Specialty.
“Any carrier that would, for example, try to put on a tariff-related exclusion, all they would accomplish is they would lose business because there would be plenty of other carriers willing to write,” he said.
Tariffs are a data point, “but we’re not seeing them move the needle” on insurability or the actual cost of insurance, said Lenin Lopez, San Diego-based senior vice president at Arthur J. Gallagher & Co.
The U.S. financial lines market is showing signs of stabilizing, according to a report released late last year by Allianz Commercial.
However, there are segments that remain more competitive, such as private D&O, the insurer said.
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