Even if you’re not planning to buy a car anytime soon, you’ll likely still feel the effects of President Donald Trump’s new 25% tariffs on foreign made vehicles and auto parts.
Starting as early as May 3, the tariffs will extend to imported components, a move that’s expected to push up costs across the board, from repair bills to insurance premiums.
“When you get into an accident, your car insurance company is the one that’s going to be buying those parts to repair your vehicle,” said Terence Lau, dean of Syracuse University’s College of Law and a former trade lawyer for Ford Motor Co.
“Many products are imported, and so I expect that will see some upward pressure on car insurance premiums.”
Repairs and Insurance to Cost More
Insurance agency Insurify estimates the average annual cost of car insurance could jump by more than $300 by the end of 2025.
That’s because insurers will have to pay more to replace parts that are now subject to import taxes.
Drivers in states like New York and Florida could see the steepest increases.
Natural rubber, for instance, mostly comes from countries like Thailand and Indonesia.
As tariffs drive up costs for these materials, tire prices could also rise. And it won’t just affect new vehicles.
According to Ivan Drury, director of insights at Edmunds, “If you’re doing the fiscally responsible thing and driving a vehicle that’s maybe 10 or 15 years old until the wheels fall off, the cost of general upkeep will increase.”
No Car Is Fully Made in America
The modern auto industry depends on global supply chains.
Nearly 70% of new cars sold in the U.S. are assembled abroad, and up to 60% of replacement parts are imported, according to industry data.
Even Tesla, often touted as the least exposed to the tariffs, uses a significant number of foreign components.
A White House fact sheet put the average share of foreign content in U.S.-built cars at around 60%.
That makes it difficult for automakers to avoid the tariffs, even if they assemble their vehicles domestically.
Higher Prices Already Kicking In
Consumers are already rushing to buy cars before prices go up.
Bloomberg reported that new car sales rose 11% in March, and used car inventories are tightening.
The average sticker price for a new car was already $47,500 in March, a 22% jump from five years ago, according to Kelley Blue Book.
Cox Automotive projects that tariffs could add about $6,000 to the cost of imported vehicles and $3,600 to U.S.-assembled cars.
Cars under $30,000—already a shrinking category—will be hit especially hard.
“We’d finally gotten to the point where rates had caught up to the losses, and we actually started to see some companies decrease their rates a little bit,” said Bob Passmore, a vice president at the American Property Casualty Insurance Association.
Automakers Are Adjusting
Some automakers are responding by ramping up domestic production.
General Motors is adding jobs at its Indiana plant, while Stellantis is idling some facilities in Mexico and Canada.
Others, like Jaguar Land Rover, are pausing U.S. shipments entirely while they weigh their options.
President Trump has hinted at giving automakers “a little bit of time” to adapt, but details are scarce.
For now, uncertainty is the norm, and consumers will likely be the ones footing the bill.