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You may be aware that President Donald Trump’s global tariff war will see Americans paying more for consumer goods, but have you considered the cost of services will also rise?
According to a February report from Insurify, the cost of full-coverage car insurance in the U.S. could increase by 8% on average this year with Trump’s 25% import tariffs on car parts made in Mexico and Canada. The only exemptions are USMCA-compliant parts that qualify for preferential treatment — meaning they meet certain place-of-origin manufacturing and labelling requirements, among other stipulations.
Plus, with Canadian steel and aluminum facing the same tariff, the price of manufacturing auto parts in America could also skyrocket.
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The cost of auto parts is a major factor in the final price of your auto insurance. The car industry in the U.S. is reliant on our neighbors to the north and south, as the U.S. imports roughly 32% of its total auto parts from Canada and Mexico, according to data cited in the Insurify report.
Imports of finished cars and trucks from Canada and Mexico also account for one-fifth of all vehicles sold.
Tariffs on your transportation
Increasing insurance costs may not be the only headache. Demand for cars produced domestically could see automakers expand their workforces and add to the final cost of their vehicles.
Manufacturers may also have to absorb the higher cost of steel and aluminum imports, which will likely be reflected in car prices.
Whether you’re buying a new car or repairing a used one, the cost of parts will make transportation more expensive for Americans. Demand for cars made domestically may also increase if imports become prohibitively expensive.
USA Today reports that tariffs could make the average cost of a new car rise by about $3,000, according to Wolfe Research.
Rising costs for insurance
In February, the American Property Casualty Insurance Association reported that about six in 10 auto replacement parts used in U.S. repair shops are from Canada, Mexico or China. Higher auto parts costs could lead to increased costs for insurers, with premiums rising accordingly.
Read more: Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it
What’s more, the national average cost for car repairs is $838, according to a report from the Kelley Blue Book. With tariffs, this could put the cost of repairs over $1,000.
In spite of these rising insurance costs, remember that repairing your vehicle is often cheaper than leasing or financing a new one. You can also save money in the long run through proactive maintenance. The upfront cost of a comprehensive plan could be worth it if you’re involved in a serious accident.
Speaking to USA Today, Insurify data journalist Matt Brannon projects that New York state will see the biggest increases in insurance rates this year, totalling $489 by end of year. Nearly a fifth — or $110 of that cost — is directly attributed to tariffs, he reported.
The good news? Brannon said that car owners probably won’t see increases in their insurance bill until the end of the year. Most insurers have to be approved by state regulators to increase the cost of premiums. This process can take months.
“We expect those price increases would show up when drivers renew their policies or switch to a new insurer, rather than in the middle of a six-month coverage period,” he said.
You can get ahead of these anticipated costs by setting aside more for your savings, and researching a more competitively-priced policy for your auto insurance, so when you renew you won’t feel it in your wallet.
One way to search for the best auto insurance rates and a new plan is with OfficialCarInsurance. This free platform helps you instantly sort through the best policies from car insurance providers in your area, including trusted names like Progressive, GEICO and Allstate. With rates as low as $29 per month, you can find coverage that suits your needs — potentially saving you hundreds of dollars per year.
To get started, fill in your information and OfficialCarInsurance will provide a list of the top insurers in your area.
More ways to save
In early April, J.P. Morgan Research estimated that the probability of a recession in 2025 was 60%. With the odds stacked against the economy, Americans are looking for ways to cut back on monthly expenses.
While you’re searching for better car insurance rates with OfficialCarInsurance, don’t miss the opportunity to check out OfficialHomeInsurance. Their platform makes it easy to find the coverage you need — without the hassle of calling multiple providers for quotes.
Simply fill out a few details and you could save an average of $482 a year.
Another easy way to cut down on costs is to look at your bank fees. Most banks charge between $5 and $35 a month in account fees alone, but many online banks can offer you zero fees and higher interest rates due to lower overhead.
For example, a high-yield cash account with Wealthfront earns 4.00% APY on deposits — almost 10 times the national average. Plus, Wealthfront charges no account, monthly or overdraft fees.
Even better, you can fund your account with as little as $1, and enjoy 24/7 instant withdrawals. There are no transfer fees either if you want to move your money into a Wealthfront investment account.
Squirrelling away small amounts may be a better place to begin for those just starting out on their path to financial freedom. One way to do this is with Acorns, an automated investment platform that simplifies setting aside extra funds.
By signing up and linking your bank account, Acorns will automatically round up the price to the nearest dollar and deposit the difference into a smart investment portfolio for you, allowing you to grow your wealth without even thinking about it. In other words, that $4.25 coffee is now a 75 cent investment in your future.
The best part? Acorns is offering a $20 bonus for new members.
What to read next
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
