Tariffs Impact on Auto Repair Costs and Insurance Prices

Written By: Feliciano Jiron

With the increase of prices on Auto Parts becoming heavily impacted by the current Broad Tariffs that the United States has implemented along with a 25% levy on imported vehicles, as well as additional tariffs on Chinese steel, aluminum, and other items. These factors are truly raising the cost of vehicle components and mechanical parts across the U.S.  

According to Investopedia.com and Kiplinger.com about 60% of U.S. replacement parts come from Mexico, Canada, and China, this significantly increases prices for both new components and maintenance parts. Auto repair shops are feeling the pressure and are already raising their prices to offset these costs. In the Detroit Free Press article from April 8, 2025, Skyler Chadwick from Cox Automotive warned that part prices may effectively double, especially for engines and electrical systems sourced and made overseas. 

These rising repair costs do have a direct impact on Auto Insurance Prices:

- Rising claims and repair costs = higher premiums As the cost of repairing vehicles increases, insurance companies face increased claim payouts and ultimately pass these costs onto policyholders.    

- Insurify.com projects full-coverage auto insurance in the U.S. will reach around $2,759 in 2025, a 19% increase driven by tariffs—translating to roughly $324 more annually. Without tariffs, the expected increase was only about 5%.      

- On a state-by-state basis, consumers could see increases ranging from 12% to 24%, with some states like New York and Maryland seeing hikes of $533 to $568 due specifically to tariffs.   

- The American Property Casualty Insurance Association estimates tariffs could raise auto insurers’ claim costs by $7 billion to $24 billion annually in the next two years 2026 & 2027. This financial pressure heightens the likelihood of widespread premium hikes.  

These changes and increases are now creating an environment where consumers are now shopping for the best price and the best coverage for their dollar. It is important for consumers who are exploring new auto insurance coverage to gather their information around their current rates, coverage types and any claims or cited driving violations as these will factor into new quoted rates. Remember that honesty is the best policy when approaching new insurance coverage, be upfront with the new companies quoting you to ensure that the initial quoted amount does not increase once your background data is run. This approach will allow you to benefit from better priced or improved auto coverage, lessening the stress of making this important decision.