Trump Tariffs Affect Auto Insurance
Many of us haven’t thought about tariffs since high school history class—until now. With the 2024 U.S. presidential election heating up, former President Donald Trump has proposed sweeping tariffs, including a 25% tariff on all imported goods and an additional 10% tariff on Chinese products. These tariffs could significantly impact the U.S. economy, especially the auto industry, affecting everything from car prices to repair costs—and, ultimately, auto insurance rates.
Understanding Tariffs and Their Impact on Auto Insurance
A tariff is a tax imposed on imported goods. The revenue generated from tariffs goes to the U.S. Treasury, but the real cost is passed on to consumers and businesses. Since many vehicles and car parts are imported from Mexico, Canada, and China, these tariffs could drive up the cost of vehicle ownership, leading to higher auto insurance rates.
“As with so much involving President Trump’s plans, threats are one thing, and the details of implementation are another,” says Mark Hamrick, Bankrate’s senior economic analyst. If tariffs are enacted, they could contribute to a fresh wave of inflation, affecting car prices, repair costs, and insurance premiums.
How Will Trump’s Tariffs Affect Auto Insurance?
Auto insurance rates have already surged, with full coverage car insurance costs rising 31% since January 2023. Increased repair costs, supply chain disruptions, and economic uncertainty all contribute to this trend. If tariffs take effect, here are a few ways they could impact your auto insurance:
1. More Expensive Vehicles and Repairs
A significant portion of vehicles and auto parts in the U.S. are imported. If tariffs raise the cost of repairs and replacements, insurance companies will pass these costs on to policyholders through higher premiums.
2. Shipping Delays
To bypass tariffs, companies may shift supply chains, which could disrupt the availability of vehicle parts. Delays in obtaining necessary parts could increase repair times and overall costs, further impacting insurance rates.
3. Delays in Repairs
As seen during the COVID-19 pandemic, supply chain issues caused car part shortages, leading to extended repair times. This can affect rental car availability, pushing drivers beyond their rental reimbursement window and increasing out-of-pocket expenses.
4. Increase in Totaled Vehicles
If repair costs exceed a car’s actual cash value (ACV), insurers may declare more vehicles as total losses. This could force consumers to replace their vehicles sooner than expected, contributing to financial strain.
Types of Coverage That May Be Impacted
Tariffs affecting medical equipment and healthcare-related costs could impact:
- Bodily injury coverage
- Medical payments coverage
- Personal Injury Protection (PIP)
Tariffs on auto parts and repair equipment may impact:
- Collision coverage
- Comprehensive coverage
- Rental reimbursement coverage
- Roadside assistance/towing coverage
Tariffs Have Previously Increased Car Costs
In 2018, Trump imposed a 25% tariff on imported steel and a 10% tariff on imported aluminum, triggering a trade war. Ford and General Motors reported a $1 billion loss each, with costs rising by $700 per vehicle. The impact of tariffs on auto prices is well-documented, and a new round of tariffs could worsen affordability issues for consumers.
Which Vehicles Will Be Most Affected?
There are no fully American-made cars, so most vehicles will be affected by tariffs. However, some manufacturers rely more on imports than others. Here’s how major brands may be impacted:
- Stellantis (Chrysler, Dodge, Jeep) – 40% imported
- Volkswagen AG – 40% imported
- Ford – 25% imported
- GM – 30% imported
- Tesla – Least impacted, as 65-75% of its cars are U.S.-made
Budget-conscious buyers may feel the biggest impact, as many affordable vehicles rely heavily on foreign parts. Here are assembly locations for some of 2025’s cheapest models:
| Vehicle | Final Assembly Location | U.S./Canada Content | Other Countries Content |
|---|---|---|---|
| 2024 Mitsubishi Mirage | Thailand | 0% | 91% Thailand |
| 2025 Nissan Versa | Mexico | 15% | 70% Mexico |
| 2024 Kia Forte | Mexico | 10% | 35% Korea |
| 2025 Hyundai Venue | Korea | 1% | 90% Korea |
| 2025 Chevrolet Trax | South Korea | 2% | 48% Korea, 23% Mexico |
| 2025 Kia Soul | South Korea | 1% | 90% Korea |
| 2025 Nissan Sentra | Mexico | 10% | 75% Mexico |
| 2025 Hyundai Elantra | Korea | 0% | 90% Korea |
| 2025 Volkswagen Jetta | Mexico | 21% | 33% Mexico |
| 2025 Toyota Corolla | U.S. | 55% | 25% Japan |
When Will Tariffs Affect Auto Insurance Premiums?
Insurance rate hikes due to tariffs likely won’t take effect immediately. Dr. Robert Hartwig, director of the Risk and Uncertainty Management Center at the University of South Carolina, notes that insurers will take time to analyze the impact on claims. “Over time, the tariffs could be expected to push up average claim severities,” he explains. This means minimal impact in 2025, with gradual increases through 2026 and 2027.
Bottom Line
If Trump enacts tariffs on Canada, Mexico, and China on day one of his second term, their full impact may not be felt immediately. Tariff negotiations, potential trade deals, or policy reversals could change the outcome. In the meantime, consumers should consider building an emergency fund, prioritizing vehicle repairs, and exploring auto insurance options like Toyota auto insurance, Accurate auto insurance, Hippo auto insurance, Erie homeowners insurance, American Integrity insurance reviews, Squeeze insurance, Auto Insurance World, Lemonade car insurance states, and All Clear Insurance to find the best rates and coverage.
Stay Prepared
With uncertainty around tariff implementation, now is a good time to compare auto insurance policies and ensure you’re getting the best coverage. Use tools like Hippo car insurance or Insurance Elevated reviews to find competitive rates and protect yourself against rising costs.
As history has shown, tariffs can significantly affect car prices and insurance rates, making it crucial for drivers to stay informed and prepared for potential changes.
Want to know more about other insurances, Read our latest articles.
