Two-thirds of auto insurance consumers surveyed in March by CarInsurance.com, a leading auto-insurance-education website, said they don’t support President Trump’s tariffs on major trading partners if those tariffs lead to higher car insurance costs.
In early April, the president announced sweeping tariffs on goods being imported into the U.S., although many were paused for 90 days on April 9.
However, a 25% tariff on imported cars remains in place and a 25% tariff on imported auto parts is scheduled to take effect in early May.
“Tariffs could potentially disrupt the automotive supply chain by driving up the cost of imported parts and, in turn, auto repairs.”
Byron Storms
CEO of Aspire General Insurance
The American Property and Casualty Association, an industry trade group, said in February that around 60% of replacement parts used by American repair shops are imported from Mexico, Canada and China.
The levies on car parts would increase the prices of those products, which in turn would skyrocket the cost of repairs. Insurers would likely increase their rates to cover the higher repair costs.
“While the level of tariffs appear to be in flux, we expect they will impact the cost of imported vehicles and auto parts, as well as inflate the cost of new cars, repairs and used car values due to tight profit margins for manufacturers and the interconnected global supply chain,” says Mark Friedlander, senior director, media relations, at the Insurance Information Institute (Triple-I), an industry trade group. “Some auto insurers have indicated tariffs could lead to higher premiums by the end of 2025, but most likely no premium changes would occur until 2026.”
“Tariffs could potentially disrupt the automotive supply chain by driving up the cost of imported parts and, in turn, auto repairs,” says Byron Storms, CEO of Aspire General Insurance, a private passenger auto liability insurer headquartered in Rancho Cucamonga, California.
The results of the CarInsurance survey are in line with what insurance experts predicted.
“President Trump was very clear about his intention to use tariffs during the election campaign, so I’m not surprised they have some support. Your survey results match up with those reported [by Navigator Research],” says Dr. Dave Wood, who holds the Martin Chair of Insurance in the Jones College of Business at Middle Tennessee State University.
A Navigator Research survey conducted April 3-7 found that 58% of the 1,000 registered voters surveyed had a negative view of tariffs, while only 30% had a favorable view.
“Your results are about what I would have expected. I also believe that most people think the higher costs will be temporary, and those that support tariffs believe they will be good for our economy in the long term,” Wood says.
However, one expert says he was surprised that just a third of those surveyed supported the President’s protectionist moves despite its likely impact on their auto insurance costs.
“When politics takes the place of other issues such as health care interventions, investing, or, in this case, tariffs and car insurance, my expectations are that those who support one party will support that initiative,” says Dr. Jim Brau, the Joel C. Peterson Professor of Finance at Brigham Young University’s Marriott School of Business.
“In this case, those who support the party that advances tariffs represent over 50% of Americans, so I wouldn’t be surprised if 50% of folks who support the current administration support tariffs even if their insurance rates are going up,” Brau says. “I’m actually surprised [to see] only one-third support in your survey … if the survey represented an equal mix of conservatives and liberals.”
The CarInsurance survey was conducted in late March. Some 1,500 insurance consumers responded from across the country. The survey did not ask about party affiliation.
What tariffs have been proposed by President Trump?
The president levied a 25% tariff on all foreign-built vehicles imported to the U.S., except for goods compliant with the United States-Mexico-Canada Agreement (USMCA). In those cases, only the value of a vehicle’s foreign-made components is subject to the tariff.
These tariffs are in addition to those levied on steel and aluminum in March. U.S.-produced components would not be affected, according to the White House.
With tariffs, the importer pays the costs, which are typically recouped by increasing consumer prices.
Gary Hindenes, owner of Gary’s Automotive Repair in Chandler, Arizona, says he saw an anticipatory increase in auto parts prices ahead of the tariff.
“Companies are not stupid; they are going to do a one-to-one direct cost to the consumer, and we are seeing prices rise in anticipation of the tariffs,” he says. “We have seen a 15% to 25% increase, assuming [manufacturers] will have a lower margin. This situation is so in flux that we are seeing prices rise daily. You will call one day and get a new price the next day.”
How tariffs could affect car insurance premiums
The United States imports about twice as many automotive parts and accessories as it exports, according to the International Trade Administration, which is part of the U.S. Department of Commerce. Tariffs would increase the cost of those components.
Higher costs for imported parts mean higher vehicle prices. The average cost of a new vehicle was $48,316 as of March, according to Kelley Blue Book data. But economists say levies could add thousands to the price of a new car—as much as $5,000 or $10,000.
Tariffs on foreign car parts can also mean pricier auto repairs, the cost of which insurers will have to absorb as they pay out claims.
“We anticipate that these increased expenses could pressure insurers to adjust premiums, similar to what we observed post-COVID,” Storms says.
The link between vehicle repair costs and insurance rates
Insurance carriers set premiums based on various factors, including your age, gender (in many states), location, driving history and credit score (in most states). They also factor in your vehicle, including make, model, model year and trim level, to determine projected repair and replacement costs if you file a claim.
Higher vehicle prices can lead to more expensive comprehensive and collision coverage, as insurers charge policyholders more to cover the increased costs to repair or replace a vehicle after a covered claim. Adding tariffs to imported parts could also result in supply chain shakeups, which could mean longer repair times and higher claim payouts.
With higher repair and replacement costs, the point at which a covered vehicle may be considered a total loss for insurance purposes could change. For instance, an insurance provider might deem a vehicle a total loss when repairs exceed 75% of the vehicle’s value. Suppose a car is worth $20,000 before an accident, and repair costs are estimated to be $15,000 – the insurer could calculate the vehicle is a total loss.
If labor costs are $5,000 of the repair, and parts make up the other $10,000, a 25% tariff could potentially raise the repair costs to $17,250, significantly impacting the insurer’s calculations and making the vehicle much more likely to be considered a total loss.
On the other hand, tariffs could have a flattening effect on vehicle depreciation, as rising costs for new vehicles spur the demand for used cars.
What tariffs mean for drivers
In the end, insured drivers may want to brace for the impact of tariffs on the overall cost of vehicle ownership, as they’ll most likely affect the cost to buy, insure and repair a car.
Repair shop owner Hindenes explained it this way: “Let’s say you bring your car to me, and it has a steering rack under warranty. Some warranty or insurance companies might decide just to cover the old cost of parts and let the consumer pay the difference. We are already seeing that with just the anticipation of tariffs.”
Drivers most likely to be affected by the 25% tariff on auto parts include:
- Owners of foreign-made cars
- Owners of luxury cars
- Drivers with comprehensive and collision coverage
- Drivers in areas with expensive repair labor costs
- Owners who drive more than average (which includes the subsequent wear and tear on their vehicles)
Tips for consumers to navigate around tariffs
So what can you do to stay ahead of these costs?
“You have to shop around and value shop now more than ever,” Hindenes says. “People do this religiously with their grocery bill, but not their car insurance or mechanic market. Shop around, learn the market, and get educated. You want good value and not just good price.”
There are a few ways to control your car insurance premiums as tariffs take effect, such as the following:
- Maintain a good driving record. To offset cost increases, ensure you’re a good driver. That means no speeding tickets, no accidents and no claims. Moving violations and claims can increase your premiums.
- Increase your deductible. Raising your deductible could lower your premiums if you can afford to do so. Request quotes or use an auto insurance calculator to find the sweet spot between what you can afford to pay and your premiums.
- Shop around. Comparing multiple quotes is one of the best ways to ensure you get a good rate on car insurance, tariffs or not. A good rule of thumb is to check rates with at least three companies every time your policy is up for renewal.
Final thoughts
These added costs could indirectly impact car insurance rates regardless of the politics behind raising tariffs on cars and auto parts. Staying informed can help you be proactive in managing your car insurance costs.
If you’re facing increased car insurance premiums, compare quotes from multiple insurance carriers to find the best rates. Ensure you understand your coverage and adjust your policy to fit your budget and risk level.
Most importantly, keep an eye on changes like these – they can greatly impact what you pay for car insurance and other everyday costs.
Resources & Methodology
Sources
- Cox Automotive. “Auto Market Report.” Accessed April 2025.
- International Trade Administration. “Automotive Parts Trade Data Visualization.” Accessed April 2025.
- S&P Global. “Trump’s automotive tariffs would impact nearly all OEMs.” Accessed April 2025.
- TD Economics. “U.S. Imposes 25% Auto Tariffs.” Accessed April 2025.
- U.S. Bureau of Labor Statistics. “Recent Price Trends in the Motor Vehicle Parts Industry.” Accessed April 2025.
- Whitehouse.gov. “Fact Sheet: President Donald J. Trump Adjusts Imports of Automobiles and Automobile Parts into the United States.” Accessed April 2025.
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