Some auto parts are entirely made abroad
Car insurance rates could rise rapidly if President Trump slapstariffs on Canada and Mexico.
Assuming a 25% tariff on the countries, costs for full-coverage car insurance would rise 60% faster in 2025, according to research from insurance-comparison website Insurify.
That that would be an average cost of $2,502 a year for full-coverage car insurance after tariffs by the end of 2025, instead of $2,435, whichrepresentsan 8% climbversus 5%.
Insurify said tariffs on Canada and Mexico would boost carinsurance rates because the U.S. importssteel and aluminum to make car parts.
As the price of replacement parts increases, premiums will have to increase accordingly, said Daniel Lucas, carrier relations manager at Insurify, in the report.
Canada and Mexico supplied around 35% of U.S. steel imports in 2024 and Canada supplied around half of aluminum imports, Insurify said.
The U.S. also imports around 32% of its auto parts from Canada and Mexico.
Supporters of tariffs say they will force automakers and repair shops to buy more U.S.-made parts, which would strengthen domestic manufacturing.
But Insurify said it will take time to move to more U.S. manufacturing and car insurance rates would still increase in the short term.
And parts such as wire harnesses, seat trimsand armrests are entirely made abroad becausetheyre too expensive to make in the U.S., Insurify said, citingWolfe Research, a New York-based financial research firm.
All these factors can add to the cost of a claim more expensive parts, lower domestic supply, and a longer supply chain that adds to rental costs, since vehicles take longer to repair, Lucas said.
How would tariffs affect car insurance rates in U.S. states?
New York state would be particularly hit hard.
Insurify said full-coverage auto insurance costs would be $4,293 a year in New York, with $110 of the increase coming from tariffs.
Without tariffs, Insurify said car insurance rates would remain flat or decrease in five states:Vermont, New Hampshire, Hawaii, New Mexicoand Idaho.
But with tariffs, Insurify said rates would increase in every state.
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Posted: 2025-02-20 23:16:32
