Wyatte Grantham-Philips, AP Business Writer
NEW YORK (AP) – Even if you’re not in the market for new cars, a 25% tariff on US President Donald Trump’s car imports could be even more expensive.
The new tax, which begins on April 3 and is expected to expand in the next few weeks, is estimated to increase the average cost of cars imported from other countries by thousands of dollars. However, repairs for vehicles currently using foreign-made parts are also expected to be even more expensive. As a result, insurance hiking costs are even further.
The White House says these tariffs will promote domestic manufacturing and generate revenue of $100 billion a year, but economists stress that they will cause major disruption by putting a burden on the global supply chains of the automotive industry. Dealers and car repair shops will have few options other than raising prices.
This is what you need to know.
How will customs affect my next car repair?
It depends on what you need to fix and where you go to service your car. However, some industry analysts have warned that drivers can see costs surge in the coming weeks or months.
“If you’re bringing a car for repairs, there’s going to be a part of it coming from another country,” said Jessica Caldwell, director of insights at Edmunds, Auto-Purchase Resources. “That price you pay can be directly affected by an increase (from these duties).”
Wednesday’s declaration on Trump’s automotive tariffs refers to engines, transmissions, powertrain parts and electrical components in particular. This covers many repairs, Caldwell notes, indicating the administration’s potential for future expansion.
Additionally, while automakers may develop new pricing strategies for new vehicles affected by tariffs, Caldwell expects it will be less likely to absorb the costs of individual parts.
Many of the auto repair market relies heavily on imports, particularly from America’s largest trading partners. About six are imported from Mexico, Canada and China in the 10 car replacement parts used in US auto store repairs, according to February figures from the American Property Cusyourty Insurance Association, a trading group representing homes, automobiles and business insurance companies.
“Today, we can’t enter the dealership and we can’t see UN parts,” said Skyler Chadwick, director of product consulting at Cox Automotive. However, procurement and supply differ between each servicer and becomes more complicated when prices rise accurately after these tariffs are in effect.
Digily Hill, owner of Crowns Corner, an auto repair and mechanic shop in Conniers, Georgia, says the car bills have already hurt her business. She was working on repairs to a vintage 1960 Opel Record car and ordered parts from Germany, but the manufacturer canceled the order due to customs duties.
“We can’t get (part) anywhere in our country, so that was a very disappointing thing,” she said.
Tariffs make repairs to those cars more difficult, as about half of the cars she is working on are foreigners.
“Unfortunately, we have no choice but to raise prices if they increase,” she said. “We cannot make such losses.”
Auto repair prices have already increased over the years, and analysts point out both the increased labor costs and the more expensive components needed for highly skilled vehicles.
Edward Salamy, executive director of the Automotive Body Parts Association, says auto companies are trying to “get monopoly” to limit bailouts to their parts and processes, reducing consumer options.
He said tariffs only make the issue worse.
How do car dealers manage it?
Joshua Allrich, who runs a family-run used car dealership called Allrich Auto in Atlanta, is someone who is worried about saving customers’ money while also facing higher costs.
“It’s going to make things even more expensive,” Areach said, adding that while he looks forward to the possibility that people may be rushing to buy cars before the tariffs come into effect, his business will need to be adjusted soon. “My wheelhouse is an economy car, an affordable car. And now, this tariff will only raise things, so it will hit us directly.”
Chadwick says dealers and other servicers need to be as transparent as possible as they prepare to have difficult conversations with customers about price increases as these tariffs are in place.
He adds that tariffs will also put pressure on the resale market. It is often necessary for dealers to serve used cars before selling to customers. This will open the door again due to increased repair costs due to customs duties. And, “all that cost comes back to consumers very quickly through having to pay for the vehicle,” he explains.
In efforts to delay impact, some dealers and repair shops may end up stocking stock before customs duties arise, especially for the most requested parts. Analysts say many have long anticipated the threat of car rates and are already tackling the impact of Trump’s new steel and aluminum collection, which came into effect earlier this month.
However, stockpiling is only available so far. Also, for small business owners, spending money on a lot of inventory at once can be at risk, especially when Trump’s repeated tariff threats raise questions about how long they will last.
If they eventually became short-lived, Caldwell said, “Do you really want to buy a lot of stock that you have to sit and hold for a while?”
What will happen to my insurance premiums?
Insurance premiums can also increase due to customs duties, as accidents involving new parts will increase the cost of repairs.
But it may come more in the future. Bob Passmore, vice president of personal lines for the American Property Casualty Insurance Association, expects consumers to impact premiums at least 12-18 months. This is because price increases must be implemented after reaching the billing fee and new fees have been submitted and approved.
Still, the Trade Association estimates that the costs of personal auto insurance claims alone could totally increase from $7 billion to $24 billion a year.
It was not immediately clear how well the large auto insurance providers were preparing for the impact of these tariffs. Allstate, State Farm, Geico and Progressive did not immediately respond to Associated Press’ request for comment on Friday.
But even if it takes a while to drip, these tariff-related hikes will arrive again as consumers are already facing rising insurance costs. The Insurance Information Institute estimated that the average US car premium increased by 14% in 2023 and 12% in 2024.
Mark Friedlander, senior director of Media Relations at the Institute, said in an email that the research trade nonprofit had projected an average premium increase of 7% in car insurance in 2025 at the beginning of the year, but that did not explain the potential tariff impact.
An increase in costs from tariffs causes a “chain reaction of insurance,” adds Caldwell. “This is not an increase in purchases, but an increase in total cost of ownership.”
May Anderson, Associated Press Business Writer in New York and Sharon Johnson, an Atlanta video journalist, contributed to the report.
Original issue: March 28, 2025, 3:49pm EDT
