Trump’s Auto Tariffs Could Hit Your Wallet
NEW YORK (AP) — Even if you’re not in the market for a new car, President Donald Trump’s plan to impose 25% tariffs on auto imports could make owning one significantly more expensive.
These new tariffs, scheduled to take effect on April 3 and expand in the weeks following, are projected to increase the average cost of an imported car by thousands of dollars. However, the economic impacts don’t stop there. Repairs for vehicles currently using foreign-made parts are also expected to become costlier, ultimately driving up insurance costs down the line.
While the White House claims these tariffs will boost domestic manufacturing and generate $100 billion in annual revenue, economists caution that straining the auto industry’s global supply chains will trigger significant disruptions across the board. Dealerships and car repair shops will likely have little choice but to increase prices, leading drivers nationwide to pay more for essential maintenance.
Shoppers at a Toyota dealership in El Monte, Calif., Thursday, March 27, 2025. (Jae C. Hong/AP)
How Will Tariffs Affect Car Repairs?
It depends on the specific repairs needed and the service location. Some industry analysts warn that drivers could see costs rise rapidly, perhaps 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 on auto tariffs specifically targets engines, transmissions, powertrain parts, and electrical components. Caldwell notes that this covers a wide range of repairs, with the administration also signaling the possibility of further expansion in the future. While automakers might develop new pricing strategies for vehicles affected by the tariffs, Caldwell expects they will be less inclined to absorb the costs of individual parts.
The car repair market heavily relies on imports, especially from America’s major trading partners. According to February data from the American Property Casualty Insurance Association, a trade group representing home, auto, and business insurers, approximately 6 out of every 10 auto replacement parts used in U.S. auto shop repairs are imported from Mexico, Canada, and China.
An employee works on the production line at the Martinrea auto parts manufacturing plant that supplies auto parts to Canada and U.S. plants, in Woodbridge, Ontario, Feb. 3, 2025. (Chris Young/The Canadian Press via AP, File)
“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, making it difficult 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, says that the auto tariffs are already hurting her business. While working on repairing a vintage 1960 Opel Rekord, she 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. Roughly half the cars she works on are foreign-made, which 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 on the rise for years, with analysts pointing to escalating labor expenses and more costly components needed for vehicles with advanced technology.
Edward Salamy, executive director of the Automotive Body Parts Association, also says car companies have been trying to limit remedies to their own parts or processes, reducing options for consumers. Tariffs will just exacerbate the issue.
“Many of these distributors will have no choice but to raise their list price.”
Managing the Changes
Joshua Allrich, who operates a family-owned used car dealership called Allrich Auto in Atlanta, shares his concerns about facing higher costs and trying to keep prices affordable for his customers.
“It’s going to make things a lot more expensive,” Allrich said. He acknowledges the possibility of a rush of buyers before the tariffs take effect, but his business will still have to adapt. “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 that dealers and other service providers will need to be transparent about the tariffs’ impacts while also preparing for difficult conversations about rising prices with customers. He adds that the tariffs will also put pressure on the reselling market. Used cars often require servicing before dealerships can resell them, leading to higher repair costs due to the tariffs. And “all that cost goes right back into the consumer” through what they ultimately pay for the vehicle, he explains.
To delay the impact of the tariffs, some dealers and repair shops might stock up on inventory before the tariffs are implemented, particularly for the most frequently requested parts. Analysts say many have anticipated the threat of auto tariffs and are already grappling with the impact of Trump’s new steel and aluminum levies that took effect earlier this month.
However, stockpiling can only go so far. For small business owners, spending money for a lot of inventory at once can be risky, particularly when Trump’s on-again, off-again tariff threats raise questions about their lasting effect.
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?”
Insurance Premium Increases
Because accident-related repairs with the newer parts will incur increased costs, insurance premiums will likely also rise due to these tariffs. However, this impact may take longer to be realized.
Bob Passmore, department vice president of personal lines at the American Property Casualty Insurance Association, expects consumers to see an impact on their insurance bills in 12 to 18 months, at a minimum. This is because increased prices must affect claims costs, and new rates need to be filed and approved.
The trade association has estimated that personal auto insurance claims costs alone could increase by a total of between $7 billion and $24 billion annually.
It isn’t immediately clear how major auto insurance providers are 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 longer to trickle down, these tariff-related hikes would arrive as consumers have already faced rising insurance costs. The Insurance Information Institute estimated that average U.S. auto premiums increased by 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 stemming from tariffs cause a “chain reaction for insurance,” Caldwell adds. “This is a total ownership cost increase, rather than just a purchase increase.”
