Trump Tariffs Could Spike Car Insurance Rates by 280% — Here’s Why
Written by
John Schmoll
Edited by
Cory Dudak
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Tariffs have dominated the headlines since President Donald Trump returned to office in January 2025. One area where many Americans have monitored tariff impact is with automobiles. It’s understandable, as cars are a major purchase for most. One unfortunate side effect of Trump’s auto tariffs is they are driving up the costs of auto insurance.
Inflationary pressures have made auto insurance increasingly expensive for Americans, according to Yahoo Finance. Worse yet, a recent report from Insurify revealed Trump’s tariffs could raise auto insurance rates 280% faster.
Below, we’ll explain just how that might happen, and why tariffs are at the center of expected rising insurance costs.
Tariffs Increase Vehicle Costs
Purchasing a car is often the second most expensive purchase Americans make. Tariffs can increase that already high cost. Trump imposed a 25% on imported cars, but some modifications allow for no stacking of levies, and cars finished in America will qualify for some reimbursements, according to CNBC.
Combined with aluminum and steel tariffs, this will cause auto insurance premiums to increase to $2,759 annually, on average, according to Insurify. This represents a 19% increase from 2024 — or increasing 280% faster. This assumes full coverage on the car in question. If it weren’t for the tariffs, Insurify reported that coverage would increase a mere $122 annually to $2,435, for an increase of 5%.
With new vehicles expected to rise in price by at least $6,000 for cars under $40,000, this makes buying a new car more painful.
Higher Repair Costs
Trump’s tariffs don’t just impact the price you pay for the car; they also impact many of the car parts. Roughly 75% of what goes into making a car comes from international suppliers, according to The White House. Much of what goes into a car is made from steel or aluminum, so neither new nor used cars are immune.
Most of these parts will incur some sort of levy. Americans will see higher repair costs and, in turn, increased auto insurance rates. “As a result of higher part costs, insurers will pay more for repair claims and eventually pass those costs on to consumers through higher insurance premiums,” according to Insurify.
More Expensive Claims
Trump’s tariffs will likely have a direct impact on the pricing of cars. It’s not surprising that more expensive cars result in more expensive claims to repair those cars. Pricier cars can often be more expensive to repair, and someone has to pay for that increase in cost.
It’s typically insurers who bear the increased costs, and those costs are logically passed on to the consumer. The hike in auto insurance rates may not be immediate, though. “The tricky thing about insurance is that pricing changes can be a long and slow cycle. Claim costs that jump today might only begin to show up in premium rates a year or two later,” noted The Wall Street Journal. Unfortunately, that means Americans could continue to pay higher premiums for some time.
Insurify pointed out that auto insurance rates have been climbing for months, thanks to more drivers on the road since exiting the pandemic. Unless relief comes from tariffs, those increases could continue to dramatically rise. Now is the time to review your policy to identify any potential for savings.
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