Not Buying A New Car? You May Still Pay An Extra $300 Due To Trump's Auto Tariffs: Here's More

President Donald Trump's auto tariffs are expected to drive up car insurance and repair costs, affecting even drivers who aren't buying new vehicles.

What Happened: Trump’s 25% tariffs on imported vehicles are slated to extend to foreign-made auto parts by May 3. Despite hints of potential leniency from Trump, experts predict that the heightened trade barriers will eventually dent consumers’ pockets, NBC News reported on Wednesday.

Auto insurance costs have been climbing for several years, and a prolonged trade war could push the average annual cost of car insurance up by over $300 by the end of the year, with New York and Florida predicted to experience the steepest increases, according to estimates from Insurify.

The rationale is straightforward: insurance companies will have to shell out more to replace damaged car parts that are subject to tariffs. “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.

Many vehicles are susceptible to multiple Trump administration tariff policies, impacting not only the auto industry but also levies on steel and aluminum, taxes on chips, and duties on global imports.

Why It Matters: Consumers have been scrambling to purchase cars before the tariffs instigate price increases. Retail sales figures released by the Commerce Department on Wednesday show a 5.3% surge in sales at motor vehicle and parts dealers from February to March.

Meanwhile, inventories of used vehicles have declined from 43 to 39 days from March to April, according to Cox Automotive.

The tariffs may put companies like Ford Motor F and General Motors GM at high risk of receiving negative ratings from ratings agency S&P.

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