Moneywise

Wed, Jun 11, 2025, 1:12 PM6 min read

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You may be aware that President Donald Trump’s global tariff war will see Americans paying more for consumer goods, but have you considered the cost of services will also rise?

According to a February report from Insurify, the cost of full-coverage car insurance in the U.S. could increase by 8% on average this year with Trump’s 25% import tariffs on car parts made in Mexico and Canada. The only exemptions are USMCA-compliant parts that qualify for preferential treatment — meaning they meet certain place-of-origin manufacturing and labelling requirements, among other stipulations.

Plus, with Canadian steel and aluminum facing the same tariff, the price of manufacturing auto parts in America could also skyrocket.

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The cost of auto parts is a major factor in the final price of your auto insurance. The car industry in the U.S. is reliant on our neighbors to the north and south, as the U.S. imports roughly 32% of its total auto parts from Canada and Mexico, according to data cited in the Insurify report.

Imports of finished cars and trucks from Canada and Mexico also account for one-fifth of all vehicles sold.

Increasing insurance costs may not be the only headache. Demand for cars produced domestically could see automakers expand their workforces and add to the final cost of their vehicles.

Manufacturers may also have to absorb the higher cost of steel and aluminum imports, which will likely be reflected in car prices.

Whether you’re buying a new car or repairing a used one, the cost of parts will make transportation more expensive for Americans. Demand for cars made domestically may also increase if imports become prohibitively expensive.

USA Today reports that tariffs could make the average cost of a new car rise by about $3,000, according to Wolfe Research.

In February, the American Property Casualty Insurance Association reported that about six in 10 auto replacement parts used in U.S. repair shops are from Canada, Mexico or China. Higher auto parts costs could lead to increased costs for insurers, with premiums rising accordingly.