U.S. President Donald Trump’s implementation of a 25% tariff on auto imports might lead to increased costs for car owners, even if they are not currently looking to purchase a new vehicle. Beginning April 3 and set to widen over the following weeks, these tariffs could potentially raise the price of an imported vehicle by several thousand dollars. Additionally, the costs associated with repairing vehicles that use foreign-made parts are anticipated to rise, thereby increasing insurance costs over time.
While the White House claims these tariffs are intended to bolster domestic manufacturing and generate $100 billion in revenue annually, economists caution that they will significantly disrupt the auto industry’s global supply chain. Consequently, dealerships and car repair shops may have little choice but to raise prices, resulting in higher maintenance costs for drivers nationwide.
In terms of the impact on car repairs, the effect will vary depending on the specific repair needed and the service provider used. However, some industry analysts warn that drivers may start seeing increased costs in the upcoming weeks or months. Jessica Caldwell, head of insights at auto-buying resource Edmunds, notes that many repairs involve parts sourced from abroad, which will be directly impacted by the tariffs.
Trump’s recent proclamation highlights engines, transmissions, powertrain parts, and electrical components as being subject to the tariffs, which cover a broad range of repairs. With automakers possibly developing new pricing strategies for vehicles affected by tariffs, they are less likely to absorb the costs of individual parts, leaving consumers facing immediate increases.
The car repair market has traditionally relied heavily on imported parts, particularly from major trading partners such as Mexico, Canada, and China. According to data from the American Property Casualty Insurance Association, approximately 60% of auto replacement parts used in the U.S. are imported. Skyler Chadwick, director of Product Consulting at Cox Automotive, indicates that sourcing and supply can differ between service providers, complicating predictions for when exactly prices will rise.
Desiree Hill, owner of Crown’s Corner, an auto repair shop in Conyers, Georgia, reports that her business is already experiencing the effects of the tariffs. Half of the cars she services are foreign-made, making those repairs more challenging under the new tariffs.
The rise in car repair prices is part of a broader trend, driven by increased labor costs and the need for more sophisticated components. Edward Salamy, executive director of the Automotive Body Parts Association, suggests that car companies are working to control the aftermarket by limiting options to their own parts or processes, and he believes the tariffs will exacerbate this trend.
At car dealerships, the tariffs are raising concerns about escalating costs. Joshua Allrich, who runs Allrich Auto, a used car dealership in Atlanta, anticipates that while the tariffs might initially drive more customers to purchase cars before the increase, his business will inevitably have to adjust to the new reality of higher prices. Chadwick emphasizes the need for transparency by dealers as they navigate pricing changes resulting from the tariffs.
Tariffs are also poised to affect the reselling market, with rising repair costs potentially impacting the sale prices of used cars. To mitigate impacts, some dealerships and repair shops may consider stockpiling inventory ahead of the tariff implementation, though this carries its own risks, especially considering the uncertainty surrounding the duration of these tariff policies.
Regarding insurance premiums, increased costs for parts and repairs will likely result in higher insurance rates, though this may take 12 to 18 months to be realized, according to Bob Passmore from the American Property Casualty Insurance Association. The association anticipates that claims costs could rise significantly as a result. While major insurance providers have not yet commented on their preparations for these changes, it is expected that consumers will eventually face higher insurance premiums.
The Insurance Information Institute had projected a 7% average premium increase for 2025, but this did not account for the potential impacts of the tariffs, which are expected to elevate costs even further. Caldwell notes that the chain reaction triggered by tariffs will lead to an overall increase in ownership costs, rather than just purchasing costs.
