A new 25% tariff on foreign auto parts is expected to push car insurance premiums for Americans higher this year, experts say.
HOUSTON — A newly implemented 25% tariff on foreign auto parts is expected to drive up car insurance premiums for American consumers this year, according to industry experts.
The tariff affects not just new cars and parts, but also extends to repair costs. When vehicles require body or engine repairs following accidents, parts sourced from foreign countries will now carry additional costs that insurance companies are likely to pass on to consumers.
“The cost of insurance will have to go up because the insurance has to cover those repairs in case of accidents or whatever comprehensive claims there may be,” said Joseph Yoon, Consumer Insights Analyst at Edmunds Auto Research.
Insurance premiums were already projected to increase by 5% this year, but with the new tariffs, that increase could reach 8%. When asked if the tariffs would exacerbate rising insurance costs, Yoon confirmed, “These definitely are not gonna help.”
The timing of price increases will vary depending on individual circumstances. According to Yoon, when consumers will notice higher premiums depends on their insurance carrier, location, and policy renewal date, but changes are expected to take effect sometime this year.
The tariff implementation comes amid broader economic tensions, with President Trump threatening new tariffs on China and Wall Street experiencing volatility.
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Based in New York, Stephen Freeman is a Senior Editor at Trending Insurance News. Previously he has worked for Forbes and The Huffington Post. Steven is a graduate of Risk Management at the University of New York.