Experts Warn Trump’s Tariffs Will Raise Car Prices and Auto Insurance Rates

Chicago, IL — The automotive industry and consumers are bracing for significant changes as President Donald Trump’s recently announced tariffs on imported vehicles and auto parts take effect. Effective April 2, a sweeping 25% tariff could not only inflate car prices but also impact auto insurance rates, according to experts and industry insiders.

The Impact on Repair Costs

Longtime auto shop owner Steve Walter, who operates a family-run mechanic business in Chicago’s North Side, has witnessed firsthand the repercussions of tariffs on his repairs. Walter, now the fourth generation in his family’s auto repair business, anticipates that the new tariffs will lead to higher costs for vehicle repairs. "Those tariffs are going to increase the average repair order," he stated, reflecting on his common practice of replacing parts rather than repairing them.

Walter is particularly concerned about how this will influence auto insurance premiums. "They’re going to go up," he predicted. The tariffs, originally introduced on steel and aluminum earlier this month, have already prompted significant cost increases that will ripple through the industry.

Tariffs Affecting Parts Supply

The tariffs specifically target imports from Mexico and Canada, impacting many parts essential to vehicle repairs. Fred Billeh, owner of Discount Auto Warehouse in Chicago, noted that nearly all the replacement parts in his warehouse originate from these countries facing tariffs. He speculated that with tariffs causing an inevitable price hike, customers will bear the brunt of the financial burden. "The added cost gets passed to the customers, to the consumer," Billeh explained.

In 2019, he experienced firsthand a surge in prices following previous tariffs, and now, he’s preparing for similar challenges. For instance, Walter showcased a fender costing approximately $200, predicting that in a few months, due to the tariffs, the same part could jump to $250. ## Projected Increases in Insurance Premiums

While car repair costs are expected to grow, so too are auto insurance premiums. The Insurance Information Institute had already anticipated a 7% increase in premiums this year prior to the announcement of the new tariffs. Bob Passmore, vice president of the American Property Casualty Insurance Association, confirmed that the impact of tariffs will create a "ripple" effect felt over the next year to a year and a half.

"If you’re increasing costs here, eventually, it’s going to show up in your premium bill," Passmore said, simplifying the connection between rising repair costs and insurance rates. As businesses adjust to the new tariffs, drivers may soon see the consequences reflected in their policy statements.

Conclusion

As the automotive industry adjusts to the upcoming tariffs, the consequences are likely to reach far beyond the dealership lots. With increased repair costs and higher auto insurance premiums on the horizon, consumers will need to prepare for the financial impact of these policies. As the situation evolves, both individual drivers and the auto industry will be watching closely to navigate the changes that will inevitably affect their wallets.

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