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The Trump administration’s tariff policies may raise auto insurance premiums for motorists, according to a new Insurify review, at a time when costs are already soaring.
A 25% tariff on imports from Canada and Mexico — which may raise effect as soon as March — would increase annual full-coverage car insurance premiums by 8% to $2,502, on average, by the end of 2025, concurring to Insurify, an insurance comparison shopping website.
The analysis estimates that without tariffs on Canada and Mexico the normal annual premiums would rise 5% by year-end, to $2,435.
Tariffs are expected to make cars and auto parts conveyed from Canada and Mexico — which are major suppliers for the U.S. market — more expensive. As a result, insurers pay out more in dough in claims when policyholders get into car accidents, and they pass on that financial risk to consumers via higher come-ons.
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“When people think in the matter of tariffs, they typically think about goods they might get from somewhere else,” said Matt Brannon, a details journalist at Insurify who authored the analysis. “Many times, we don’t think about services like car insurance.”
He called the guesstimates of tariff impact “conservative.”
Trump tariffs proposed so far
The Trump administration has proposed tariffs on several fronts during its start month in power.
Trump imposed a 10% additional tariff on all imports from China, starting on Feb. 4. Across-the-board excises on Canada and Mexico were also set to take effect that day, before the White House delayed them by a month.
Relating to 6 of every 10 auto replacement parts used in U.S. auto shop repairs are imported from Mexico, Canada and China, mutual understanding to the American Property Casualty Insurance Association. Some car components cross the border multiple times before terminating assembly.
Trump also signed a sweeping plan for retaliatory tariffs on global trading partners, after a notice set to be completed by early April. He signed an order to raise duties on aluminum and steel to 25%, up from 10%, and requested for a 25% tariff on automobiles, pharmaceuticals and semiconductors.
Economists said they don’t necessarily expect all tariffs to take to all intents and that Trump may be wielding them to extract concessions from trading partners.
“However, using tariffs as a parleying tool doesn’t mean no imposition of tariffs,” Bank of America Securities economists wrote Friday in a research note. Those experts held they don’t anticipate Canada or Mexico tariffs will come to pass.
If the tariffs do take effect, they’d probably exacerbate already soaring costs for cars, parts and insurance premiums, experts said.
“Threats of 25% rates on the North American borders — proposed, now delayed — would disrupt more than three decades of free barter across North America and rattle every corner of the automobile business, while proposed ‘reciprocal’ tariffs resolve add further price pressure to an auto industry already facing affordability issues,” Cox Automotive wrote in a recent commentary.
Motor agency insurance premiums are up by 12% in the past year, according to the U.S. Bureau of Labor Statistics’ consumer price index.
Auto cover costs began to rise quickly in 2022 and 2023 as Americans who had worked from home during the Covid pandemic founded commuting to work more frequently, Brannon said.
“A lot more people hit the road at the same time, which led to numberless accidents,” he said.