Car prices aren't the only numbers that will probably increase for the worst.
If the US government gets its way regarding a 25 percent tariff on imported auto parts from Europe, then consumers will need to be prepared to pay extra for things other than cars themselves. According to Reuters, basic repairs, insurance premiums, and increased risk of theft would also likely increase as a result of tariffs. Is this something the Trump administration has taken into account? Who knows, but auto industry groups are already sounding the alarm bells and we should all pay attention.
For example, tariffs on imported auto parts could increase auto insurance premiums by 2.7 percent, or $3.4 billion annually. How come? The American Insurance Association and other insurance groups claim “The imposition of tariffs could likely lead to the filing of hundreds, if not thousands, of requests for rate increases by insurers with insurance regulators across all fifty states.”
Moreover, it may be more difficult for insurers to find suitable replacements parts for policyholders, resulting in further delays and additional costs. But what do tariffs and car thefts have in common? “Motor vehicle theft rates could rise, as many stolen vehicles are sold for their parts,” the groups added.
Fortunately, the Trump Administration has not enacted this threat of 25 percent tariffs just yet since the Commerce Department states it is still “collecting all the facts, and completing a careful analysis. While we aim to complete the investigation and report to the President within a couple months, no proposal for action has yet been made.”
Meanwhile, the Auto Care Association, which represents 150,000 manufactures, distributors, and auto parts sellers, estimates the cost of car ownership could increase by over $700 per year per household if tariffs are imposed. “The costs of maintaining a car is going to go up as is fixing or insuring it,” said Kristin Dziczek, an economist who spoke to Reuters. “But those costs are not going to go up as much as buying a new car” with added tariff costs.