Trump’s Auto Tariffs: A Costly Ride for Car Owners?
NEW YORK (AP) — Even if you’re not in the market for a new car, recent tariffs on auto imports, implemented by the U.S. government, could make owning one more expensive. The 25% tariffs, which began on April 3 and will expand in the coming weeks, are poised to increase the average cost of a foreign-made car by thousands of dollars. Beyond the initial purchase, the tariffs also threaten to drive up the price of repairs, due to the reliance on foreign-made parts, leading to higher insurance costs down the road.
Shoppers at a Toyota dealership in El Monte, Calif.
The White House maintains that these tariffs will encourage domestic manufacturing and generate $100 billion in annual revenue. However, economists argue that the strain on the auto industry’s global supply chain will cause significant disruptions. Dealerships and repair shops will likely have little choice but to raise prices, translating to higher costs for car owners nationwide.
How Will My Next Car Repair Be Affected?
The impact on your next car repair depends on the specific parts needed and the repair shop you visit. However, industry analysts caution that costs could jump 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 the auto-buying resource Edmunds. “That price that you pay is likely going to be directly affected by the increase (from these tariffs).”
Trump’s tariffs specifically target engines, transmissions, powertrain components, and electrical components. Caldwell points out that this covers a wide range of repairs, and the administration has hinted at potential future expansions. While automakers may develop new pricing strategies for new vehicles directly affected by tariffs, Caldwell expects they’ll be less inclined to absorb the costs of individual parts, leaving consumers to shoulder the burden more immediately.
The car repair market relies heavily on imports, particularly 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, approximately 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. He adds, however, that sourcing and supply vary between services, making it complex to pinpoint exactly when prices will rise after the tariffs take effect.
Desiree Hill, owner of Crown’s Corner, an auto repair and mechanics shop in Conyers, Georgia, has already felt the impact of the tariffs. She was in the process of repairing a vintage 1960 Opel Rekord and ordered a specific part from Germany, only to have the manufacturer cancel 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. Foreign-made cars make up approximately half of the vehicles she works on, and repairing these cars will become more difficult as a result of the tariffs.
“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 increasing for years, attributed by analysts to rising labor costs and more expensive components needed for vehicles with advanced technology. Edward Salamy, executive director of the Automotive Body Parts Association, says that car companies have also been trying to “gain a monopoly” to restrict solutions to their own parts or processes, limiting options for consumers.
Tariffs, he says, will exacerbate the problem: “Many of these distributors will have no choice but to raise their list price.”
How Are Car Dealerships Managing?
Joshua Allrich, who runs a family-owned used car dealership, Allrich Auto, in Atlanta, is among those concerned about the increased costs while also trying to save his customers money.
“It’s going to make things a lot more expensive,” Allrich said. He added that his business will soon need to adjust, while looking forward to the possibility of people rushing to buy cars before the tariffs take effect. “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 suggests that dealers and other service providers need to be as transparent as possible as the tariffs take effect. They also have to prepare for difficult conversations about rising prices with customers. He adds that tariffs will also put pressure on the reselling market. Repairs are often necessary for used cars before dealerships can resell them, which could lead to higher repair costs and increased price for the consumer.
To delay the impact, some dealers and repair shops might consider stocking up on inventory before tariffs take effect, especially for frequently requested parts. Analysts say that many have been expecting auto tariffs and are dealing with the impact of Trump’s new steel and aluminum levies that started this month. However, stockpiling has its limits. And for small business owners, purchasing a large amount of inventory at once can be risky, especially when Trump’s intermittent tariff threats raise concerns over how long they will last.
If the tariffs are short-lived, Caldwell noted, “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 Will Happen to My Insurance Premiums?
Because accidents involving new parts will see increased costs for repairs, insurance premiums will likely follow. However, this impact may be felt further down the line. Bob Passmore, department vice president of personal lines at the American Property Casualty Insurance Association, anticipates consumers will see the impact on their insurance bills in 12 to 18 months at a minimum. This is due to the time needed for increased prices to affect claim costs and then be implemented after new rates are filed and approved.
Still, the trade association has projected personal auto insurance claim costs alone could increase between $7 billion and $24 billion annually.
It was not immediately clear how large auto insurance providers were preparing for the impacts of the tariffs. Allstate, State Farm, Geico, and Progressive did not immediately respond to The Associated Press’ requests for comment on Friday. But even if it takes a while to trickle down, these tariff-related increases come as consumers face already rising insurance costs. The Insurance Information Institute calculated that average U.S. auto premiums rose 14% in 2023 and 12% in 2024.
Mark Friedlander, the institute’s senior director of media relations, stated via email that the nonprofit projected a 7% average premium increase for auto insurance in 2025. However, that projection did not take into account the potential impacts of tariffs, which will push premiums even higher.
Increased costs resulting from tariffs begin a “chain reaction for insurance,” Caldwell mentions. “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.
