You may be aware that President Donald Trump’s tariff war with Canada and Mexico will see Americans paying more for consumer goods, but have you considered the cost of services will also rise?
According to a February report from Insurify, the cost of full-coverage car insurance in the U.S. could increase by 8% on average this year if Trump persists on 25% import tariffs on car parts made in Mexico and Canada.
Plus, with Canadian steel and aluminum facing the same tariff, the price of manufacturing auto parts in America could also skyrocket.
The cost of auto parts is a major factor in the final price of your auto insurance. The car industry in the U.S. is highly reliant on our neighbors to the north and south, as the U.S. imports roughly 32% of its total auto parts from Canada and Mexico, according to data cited in the Insurify report. Imports of finished cars and trucks from Canada and Mexico also account for a fifth of all vehicles sold.
Increasing insurance costs may not be the only headache, as demand for cars produced domestically will see automakers expand their workforces, and add to the final cost of the vehicles they make.
They’ll also have to absorb the higher cost of steel and aluminum imports, which will likely be reflected in car prices, too.
Whether you’re buying a new car or repairing a used one, the cost of parts will make transportation more expensive for Americans. Demand for cars made domestically may also increase if imports become prohibitively expensive.
USA today reports that according to Wolfe Research, tariffs could make the average cost of a new car rise by about $3,000.
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In February, the American Property Casualty Insurance Association reported that approximately six in 10 auto replacement parts used in U.S. repair shops are imports from Canada, Mexico or China. With higher costs for these auto parts leading to increased costs for insurers, premiums will rise accordingly.
According to a recent report from the Kelley Blue Book, the national average cost for car repairs is $838. With tariffs, this could put the cost for repairs well over $1,000.
