Trump’s tariffs won’t just raise car prices, but auto insurance rates, experts say

Chicago — Steve Walter’s family has been fixing cars on Chicago’s North Side for 70 years.

“I’m fourth generation,” Walter said. “My grandfather worked on pre-war Italian race cars.” 

Walter’s mechanics replace metal more often than they repair it, so he’s bracing for the impact of President Trump’s newly announced 25% tariffs on all vehicles and auto parts imported into the U.S., set to take effect April 2. 

“Those tariffs are going to increase the average repair order,” Walter said.

He also believes that the tariffs will drive up auto insurance premiums.

“They’re going to go up,” he said.

The president’s 25% tariffs on all steel and aluminum imports took effect earlier this month, but Mr. Trump gave automakers a one-month exemption after speaking to leaders of the Big Three automakers: Ford, General Motors and Stellantis. In early March, Mr. Trump also instituted, and then paused until April 2, 25% tariffs on imports from Mexico and Canada that are covered under a 2020 trade agreement. 

The cost of repairs for a five-year-old car averaged between $5,073 and $6,274 last year, according to numbers from CCC Intelligent Solutions, and Walter expects that to rise. 

Walter showed CBS News a fender that cost approximately $200. He says that with the tariffs, “maybe in six months to a year, we’ll see, you know, this fender being $250.”

Nearly all of the replacement parts on the shelves inside Fred Billeh’s Discount Auto Warehouse in Chicago came from the countries facing new tariffs. He estimates his warehouse carries “millions” of parts.

Billeh’s prices increased in 2019 after Mr. Trump imposed tariffs in his first term. He said the added cost gets passed “to the customers, to the consumer.”

The Insurance Information Institute had already forecast premium increases this year of about 7%, and that was before the new tariffs.

Bob Passmore, vice president of the American Property Casualty Insurance Association, a trade group that represents insurance companies, says that the impact of the tariffs will create a “ripple” effect, with tariffs today being felt in 12 to 18 months.

“If you’re increasing costs here, eventually, it’s going to show up in your premium bill,” Passmore said. “…It’s pretty simple.”