US President Donald Trump holds a reciprocal tariffs poster during a tariff announcement in the Rose Garden of the White House in Washington, DC, US, on Wednesday, April 2, 2025. Trump plans to roll out tariffs on global trading partners, the centerpiece of his effort to bring back manufacturing to the US and reshape a world trade system he has long decried as unfair. Photo: Kent Nishimura/Bloomberg
Two-thirds of U.S. drivers said they won’t get behind the Trump Administration’s tariffs if they lead to higher car insurance rates, according to a survey by CarInsurance.com.
In April, the President levied a 25% tariff on all foreign-built vehicles imported to the U.S. that will go into effect in early May, except for those compliant with the United States-Mexico-Canada Agreement (USMCA).
“While the level of tariffs appear to be in flux, we expect they will impact the cost of imported vehicles and auto parts, as well as inflate the cost of new cars, repairs and used car values due to tight profit margins for manufacturers and the interconnected global supply chain,” said Mark Friedlander at the Insurance Information Institute (Triple-I). “Some auto insurers have indicated tariffs could lead to higher premiums by the end of 2025, but most likely no premium changes would occur until 2026.”
Kelley Blue Book data shows the average cost of a new vehicle was $48,316 as of March 2025, but economists say levies could add thousands to the price of a new car—as much as $5,000 or $10,000, according to the survey.
Meanwhile, tariffs on foreign car parts can also mean pricier auto repairs, the cost of which insurers will have to absorb as they pay out claims.
If labor costs are $5,000 of the repair, and parts make up the other $10,000, the survey said a 25% tariff could potentially raise the repair costs to $17,250, significantly impacting the insurer’s calculations and making the vehicle much more likely to be considered a total loss.
Roughly 60% of replacement parts used by American repair shops are imported from Mexico, Canada and China.
At the same time, “President Trump was very clear about his intention to use tariffs during the election campaign, so I’m not surprised they have some support,” said Dr. Dave Wood at Middle Tennessee State University. “Most people think the higher costs will be temporary, and those that support tariffs believe they will be good for our economy in the long term.”
CarInsurance.com said drivers most likely to be affected by the 25% tariff on auto parts include:
- Owners of foreign-made cars.
- Owners of luxury cars.
- Drivers with comprehensive and collision coverage.
- Drivers in areas with expensive repair labor costs.
- Owners who drive more than average (which includes the subsequent wear and tear on their vehicles).
© Touchpoint Markets, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.