Will your cars get costlier after Trump tariffs kick in? Know what will happen to your insurance premiums

The new taxes are estimated to raise the average cost of a car imported from a different country by thousands of dollars, the Associated Press reported. Not just buying a new car, but owning one will also become more expensive as the tariff on car parts could hike the cost of people’s auto repair bills. As repairs for vehicles that use foreign-made parts will also likely increase, insurance costs will soar too.

With the rise in tariffs, dealerships and car repair shops will possibly have no choice but to increase prices. This will lead drivers across the United States to pay more for everyday maintenance.

How will the tariffs impact your car repair?

The car repair market has largely depended on imports, particularly from America’s biggest trading partners. According to February numbers from the American Property Casualty Insurance Association, which is a trade group that represents home, auto and business insurers, about six in every 10 auto replacement parts used in auto shop repairs in the US are imported from Mexico, Canada and China.

“If you are bringing your car to get repaired, chances are, it’s going to have a part that comes from another country,” said Jessica Caldwell, head of insights at auto-buying resource Edmunds, according to AP. “That price that you pay is likely going to be directly affected by the increase (from these tariffs).”

Joshua Allrich, who operates a family-owned used car dealership called Allrich Auto in Atlanta, said he is worried about facing higher costs while he tries to save his customers’ money. “It’s going to make things a lot more expensive,” Allirch said. “My wheelhouse is economy cars, affordable cars. And now, this tariff is going to directly hit us because it’s gonna just make things go up.”

Before the levies go into effect, US consumers are rushing to buy new cars, CBS News reported. Among them is Burlington, Vermont-based artist Val Hird, who went to lock in a deal on the car she wants, before April 2, which Trump has referred to as ‘Liberation Day.’ Hird shared with CBS MoneyWatch that she wanted a Toyota RAV4 Plug-in hybrid, but her local Toyota dealer did not have the vehicle in stock.

Talking about her reluctance to place an order on a new car, Hird said she did it only because the tariffs are being imposed. Locating a used version of her preferred model of the vehicle at a dealership in Rhode Island, she said she “leapt to the phone” to purchase it.

Here’s what will happen to your insurance premiums

Insurance premiums are expected to rise, as accidents involving new parts will face soaring costs for repairs. However, that may not happen anytime soon. Bob Passmore, department vice president of personal lines at the American Property Casualty Insurance Association, said he expects to see their insurance bill getting affected in 12 to 18 months at a minimum as increased prices will first have to hit claims costs, and then be implemented after new rates are eventually filed and approved.

However, the trade association believes that personal auto insurance claims costs could increase a total of between $7 billion and $24 billion annually. In fact, consumers have already faced soaring insurance costs. According to an estimate by the Insurance Information Institute, average US auto premiums increased 14% in 2023 and 12% in 2024. Caldwell noted that increased costs due to tariffs cause a “chain reaction for insurance,” adding, “This is a total ownership cost increase, rather than just a purchase increase.”