Trump’s Auto Tariffs: Higher Costs Ahead for Car Owners
NEW YORK (AP) — U.S. President Donald Trump’s 25% tariffs on auto imports, set to take effect on April 3rd, are poised to increase the cost of owning a car, affecting everything from repairs to insurance premiums.
These new taxes are projected to raise the average cost of an imported car by thousands of dollars. Furthermore, the tariffs are expected to make repairs for existing vehicles that rely on foreign-made parts more expensive, which will likely lead to higher insurance costs in the future.
Shoppers browse at a Toyota dealership in El Monte, California.
While the White House claims these tariffs will boost domestic manufacturing and generate $100 billion annually, economists warn about major disruptions to the auto industry’s global supply chain. Dealerships and auto repair shops will likely have no choice but to raise prices, meaning drivers across the country could pay more for routine maintenance.
Impact on Car Repair Costs
How will these tariffs affect your next car repair? According to industry analysts, drivers might see costs increase in the coming weeks or months.
“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 Edmunds, an auto-buying resource. “That price that you pay is likely going to be directly affected by the increase (from these tariffs).”
Trump’s proclamation specifically targets engines, transmissions, powertrain parts, and electrical components. Caldwell also notes that the administration has hinted at the possibility of expanding the tariffs to include more components.
Automakers might create new pricing strategies for new vehicles impacted by the tariffs, but Caldwell anticipates they will be less likely to absorb the costs of individual parts. Consumers may have to bear the brunt of these expenses sooner rather than later.
New Mazda SUVs arrive at the Port of Long Beach in California.
The car repair market heavily depends on imports, mainly from America’s largest trading partners. According to February figures from the American Property Casualty Insurance Association, a trade group representing home, auto, and business insurers, around six out of ten 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 among different service providers, making predicting when exact prices will rise after the tariffs take effect a complex task.
Desiree Hill, owner of Crown’s Corner, an auto repair and mechanics shop in Conyers, Georgia, said the auto tariffs were already impacting her business. She was working on repairing a vintage 1960 Opel Rekord and ordered a part from Germany, but the manufacturer canceled the order due to the tariffs.
“I can’t get (the part) anywhere in our country. Period. So that that was very disappointing,” she said. Approximately half of the cars she works on are foreign-made, which means the tariffs will make repairing those vehicles 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.”
Car repair prices have already been rising for several years, with analysts pointing to increasing labor costs and more expensive technology-reliant components. Edward Salamy, executive director of the Automotive Body Parts Association, also claims car companies have attempted to “gain a monopoly” to limit remedies to their own parts or processes, which reduces consumer options.
Tariffs, he continued, will exacerbate the issue: “Many of these distributors will have no choice but to raise their list price.”
How Are Dealerships Handling This?
Joshua Allrich, who runs Allrich Auto, a family-owned used car dealership in Atlanta, is concerned about facing higher costs while also aiming to save his customers money.
“It’s going to make things a lot more expensive,” Allrich said, adding that, while he’s looking forward to the possibility of people rushing to buy cars before the tariffs take effect, his business will soon have 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 said that dealers and other service providers would require transparency as these tariffs take effect, alongside being prepared for difficult conversations about rising prices with customers.
He added that tariffs will pressure the reselling market. Used cars frequently need servicing before dealerships can resell them, potentially increasing repair costs due to tariffs. And “all that cost goes right back into the consumer” through what they end up paying for the vehicle, he explained.
To delay the impact, some dealers and repair shops may stock up on inventory before the tariffs are implemented, especially for the most requested parts. Analysts say that many have long anticipated the threat of auto tariffs, and are already dealing with the impact of Trump’s new steel and aluminum levies implemented earlier this month.
But stockpiling has its limits. And for small business owners, investing a large sum in inventory all at once can be risky, especially when the on-again, off-again tariff threats from Trump raise questions about how long they will last.
If the tariffs are 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?”
What About Insurance Premiums?
Insurance premiums are likely to increase due to tariffs, as accidents involving new parts will lead to higher repair costs. However, this impact may be further down the line.
Bob Passmore, the department vice president of personal lines at the American Property Casualty Insurance Association, anticipates consumers will see their insurance bills affected in a minimum of 12 to 18 months. This is because it takes time for increased prices to impact claims costs, get implemented, and for new rates to be approved.
The trade association has estimated that personal auto insurance claims costs alone could rise between $7 billion and $24 billion annually.
It was not immediately clear how major auto insurance providers were preparing for the impacts of these tariffs. Allstate, State Farm, Geico, and Progressive did not immediately respond to The Associated Press’ requests for comment on Friday.
Even if it takes some time, these tariff-related hikes will occur as consumers already face rising insurance costs. 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 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 because of tariffs are creating a “chain reaction for insurance,” Caldwell adds. “This is a total ownership cost increase, rather than just a purchase increase.”
