New tariffs, including those specific to vehicles, are causing many Americans to reconsider their plans to purchase a car. Some are accelerating their buying plans to take advantage of current tariff-free pricing, while others are rethinking whether they want a new car due to economic uncertainty. Although President Trump has considered pausing the 25% tax on imported cars temporarily, tariffs will still impact the auto industry. Even choosing not to buy a new car won’t shield drivers from price changes entirely, as tariffs are increasing the cost of parts, leading to higher maintenance and repair costs, which in turn affects auto insurance prices.
Jessica Caldwell from Edmunds notes, “These tariffs are going to affect everybody who owns and operates a car.” Current tariffs include a 25% levy on imported new cars and plans for a similar tariff on imported car parts. Other tariffs on steel, aluminum, and goods from Canada and Mexico also affect car parts. This situation is pushing up repair and maintenance costs, impacting auto insurers’ expenses. Consequently, insurance premiums are likely to rise as insurers pass on increased repair costs to customers.
Even those with older cars and minimal coverage may see rate increases, as property damage coverage that pays for repairs to others’ vehicles will now cost more. Shannon Martin from Bankrate explains, “If you’re someone with an older car and liability-only coverage, you might think, ‘Well, my rate’s going to stay the same.’ But it won’t.” Insurance rates have already been rising sharply due to pandemic-related supply chain disruptions, but tariffs add further uncertainty.
Drivers shouldn’t expect immediate premium hikes, as insurance rates change more slowly. Companies must assess costs and negotiate with state regulators before adjusting rates. Additionally, the constantly changing nature of tariffs makes forecasting auto insurance rate increases difficult. Amid this unpredictability, experts recommend having a trusted mechanic, shopping around for insurance, and maintaining a good driving record.
— new from NPR
