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The tariff policy of the Trump administration can increase car insurance premiums for motorists according to a new insurance analysis. This at a time when drivers continue to see the costs rise in the midst of the inflation of the pandemic era.
A rate of 25% on the import from Canada and Mexico who may take effect, according to the at the end of 2025 on average would increase the annual car insurance premiums for full coverage by 8% to $ 2,502, according to Insurify.
It estimates that the average annual premiums would rise by 5% by the end of the year to $ 2,435, without rates about Canada and Mexico.
It is expected that the rates and car parts from Canada and Mexico – which have been imported for major suppliers for the American market – will make it more expensive. As a result, insurers pay more money on claims when policyholders end up in car accident and they pass on that financial risk to consumers via higher premiums.
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“When people think of rates, they usually think of goods that they might get from something else,” said Matt Brannon, a data journalist at Insurify that the author analysis. “We often don’t think of services such as car insurance.”
He called the estimates of tariff effect ‘conservative’.
Trump rates presented so far
During the first month, the Trump government proposed rates for different fronts.
Trump imposed a 10% extra rate on all input from China, from 4 February 4. Over the entire rates in Canada and Mexico, that day would also take effect before the White House delayed them for a month.
About six of the 10 car -inviting parts that are used in the repairs of the American car shop have been imported from Mexico, Canada and China, according to the American Property Casualty Insurance Association. Some car components cross the border several times before the final assembly.
Trump also signed a radical plan for retribution rates for global trading partners, after an assessment that was completed at the beginning of April. He signed an order to raise tasks on aluminum and steel to 25%, an increase of 10%, and proclaimed a rate of 25%on cars, pharmaceutical products and semiconductors.
Economists do not necessarily expect all rates to come into effect. Trump can use them as a tool to extract concessions from trading partners, they said.
“However, the use of rates as a negotiating tool does not mean that no rates are imposed,” wrote Bank of America Securities on Friday in a research memorandum. Those experts do not expect that the rates of Canada or Mexico will succeed.
However, if they do, they would probably already aggravate rising premiums for cars, parts and insurance premiums, experts said.
“Threats of 25% rates on North -American borders – proposed, now delayed – would disrupt more than three decades of free trade in North America and rattle every corner of the car company, while proposed ‘mutual’ rates add a further price pressure to a Auto industry that is already confronted with affordability problems, “wrote Cox Automotive in a recent commentary.
According to the consumer price index, the premiums for motor vehicles insurance have risen by 12% by 12%.
Insurance costs started to rise rapidly in 2022 and 2023, because Americans worked less often from home and worked more often to work, said Brannon.
“Many more people go out at the same time, which led to more accidents,” he said.