Trump’s Auto Tariffs: Expect Higher Costs for Car Owners
By WYATTE GRANTHAM-PHILIPS, AP Business Writer
NEW YORK (AP) — Motorists may soon find themselves paying more to own a car, even if they aren’t shopping for a new one. The Trump administration’s 25% tariffs on auto imports, which began taking effect on April 3, are poised to raise the price of car ownership in multiple ways.
These new taxes are estimated to increase the average cost of a car imported from another country by thousands of dollars, according to experts. But the tariffs’ impact stretches beyond vehicle purchases. Repairs on cars with foreign-made parts will likely become more expensive, leading to higher insurance costs down the road.
While the White House says the tariffs will boost domestic manufacturing and generate $100 billion in annual revenue, economists caution that the move could significantly disrupt the auto industry’s global supply chain. Dealers and repair shops will likely have no choice but to raise prices, a step that could have far-reaching effects on consumer wallets across the country.
How Will Tariffs Affect Car Repair?
The impact of the tariffs on auto repairs will depend on the specific fix needed and where the car is serviced. Industry analysts warn that repair costs could increase quickly.
“If you are bringing your car to get repaired, chances are, it’s going to have a part that comes from another country,” said Jessica Caldwell, head of insights at auto-buying resource Edmunds. “That price that you pay is likely going to be directly affected by the increase (from these tariffs).”
The Wednesday proclamation on auto tariffs focuses on components such as engines, transmissions, powertrain parts, and electrical components. Caldwell notes that this covers a significant portion of repairs, and the administration has hinted at potential future expansion.
Automakers may develop new pricing strategies for new vehicles affected by the tariffs. However, they are less likely to absorb the costs of individual replacement parts, which means consumers may feel the impact immediately.
Supply Chain Issues and Rising Costs
The car repair market relies heavily on imports, particularly from America’s major trading partners. According to February data from the American Property Casualty Insurance Association, about 60% of replacement parts used in U.S. auto shop repairs are imported from Mexico, Canada, and China.
“You can’t walk into a dealership today and not see a United Nations of parts,” said Skyler Chadwick, director of Product Consulting at Cox Automotive. However, sourcing and supply vary between service providers, complicating the process of predicting when prices will rise after the tariffs take effect.
Desiree Hill, owner of Crown’s Corner, an auto repair shop in Conyers, Georgia, says the tariffs have already impacted her business. She was working on a vintage 1960 Opel Rekord car and had to cancel an order for a part from Germany because of the tariffs.
“I can’t get (the part) anywhere in our country. Period. So that that was very disappointing,” she said.
About half the cars she works on are foreign-made, meaning she expects repairing those cars to become more difficult.
“Unfortunately we don’t have a choice but to raise prices if they are raised on us,” she said. “We can’t take that kind of loss.”
Rising labor costs and more expensive components for vehicles with advanced technology have already pushed car repair prices higher in recent years. Edward Salamy, executive director of the Automotive Body Parts Association, also observes that car companies aim to “gain a monopoly” to limit remedies to their own parts or processes, thus reducing options for car owners. Tariffs, he said, will only exacerbate the issue: “Many of these distributors will have no choice but to raise their list price.”
How are Car Dealerships Managing?
Joshua Allrich, the operator of Allrich Auto, a family-owned used car dealership in Atlanta, is among those concerned about rising costs and trying to keep prices down for customers.
“It’s going to make things a lot more expensive,” he said, also adding that he is looking forward to the possibility of people rushing to buy cars before the tariffs take effect, but his business will soon need to adjust. “My wheelhouse is economy cars, affordable cars. And now, this tariff is going to directly hit us because it’s gonna just make things go up.”
Chadwick says dealers and service providers will need to be transparent as these tariffs take effect while engaging in difficult conversations about rising prices with customers.
Tariffs are also going to put pressures on the reselling market, he adds. Used cars often require service before they are sold, opening the door for increased repair costs. “All that cost goes right back into the consumer” through the final price of the vehicle, he explained.
Some dealers and repair shops might try to delay impacts by stocking up on inventory before tariffs take effect, especially for the most requested parts. Many have long anticipated the threat of auto tariffs and are already dealing with the effects of Trump’s new steel and aluminum levies that started earlier this month.
Stockpiling can only go so far, however. And for small business owners, spending a lot of money at once on inventory carries risks, especially when ongoing tariff threats raise questions about how long the tariffs will last.
If the tariffs end up being short-lived, Caldwell said, “Do you really want to buy a bunch of inventory that you’re going to have to sit and hold on (to) for quite some time?”
Insurance Premiums May Rise as well
Increased repair costs will likely lead to higher insurance premiums because of the tariffs.
But that may take longer to materialize. Bob Passmore, department vice president of personal lines at the American Property Casualty Insurance Association, expects consumers to see the impact on their insurance bills in 12 to 18 months at a minimum. That’s because increased prices have to affect claims costs, which are then implemented after the new rates are filed and approved.
Still, the trade association estimates that personal auto insurance claims costs alone could increase by a total of between $7 billion and $24 billion annually.
It was unclear how major auto insurance providers were preparing for the impact of the tariffs. Allstate, State Farm, Geico, and Progressive did not immediately respond to requests for comment.
Even if the impact takes time to materialize, these tariff-related hikes would compound the rising insurance costs that consumers already face. The Insurance Information Institute estimated that average U.S. auto premiums increased 14% in 2023 and 12% in 2024.
Mark Friedlander, the institute’s senior director of media relations, said via email that the research trade nonprofit projected a 7% average premium increase for auto insurance across in 2025 at the start of the year — but that didn’t account for potential tariff impacts, which will drive them even higher.
Increased costs resulting from tariffs cause a “chain reaction for insurance,” Caldwell adds. “This is a total ownership cost increase, rather than just a purchase increase.”
AP Business Writer Mae Anderson in New York and Video Journalist Sharon Johnson in Atlanta contributed to this report.
