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The North American auto industry is rolling up under tariffs from US President Donald Trump, and experts say it’s not just the market for those new cars on the market.
Existing car owners will also feel pinched.
According to the Canadian Chamber of Commerce, automatic tariffs, combined with Trump’s tariffs on steel and aluminum, will increase insurance and repair costs for Canadian and U.S. auto owners.
“The price of automobiles due to tariffs leads to higher repair costs, which subsequently raises insurance premiums. The tariffs on steel and aluminum could increase repairable claims costs by 1% to 2%.”
“As repair parts become more expensive, the cost of repairing cars is higher, and these fees may be passed on to consumers, resulting in higher premiums when renewing policies.”
Daniel Ivans, insurance expert and broker at Rates.ca, said a portion of the insurance costs that deal with liability coverage or injury coverage may not be affected.
But, he said, a quarter of the average premium is used to cover physical damage to your vehicle.
This includes collisions, accidents, thefts, vandalism, hits and losses caused by running or fires. He said that this portion of premiums will rise as tariffs increase the cost of parts.
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“Overall, we may consider increasing the premiums of automobiles by 3% due to tariffs,” he said.
“These are based on early estimates we’ve seen.”
Glen Hodgson, a senior researcher at CD Howe Institute, estimates the steeper hike.
“We shouldn’t be surprised to see that auto insurance prices have risen by 5% to 10% due to all the turmoil. And it could be higher,” he said.
“If Trump’s tariffs do hit, we also have a 25% tariff on vehicles in another country in North America. That obviously goes to the price of the car and all the expenses of owning the car.”
That could also mean Canadians may have to pay more to replace parts by bringing cars to mechanics, Evans said.
“As the cost of the parts themselves increases, the cost of repairs will naturally increase,” he said, adding that if employees seek higher wages, whether the inflationary impact of tariffs translates into higher labor costs when employees seek higher wages.
Evans recommends shopping based on where you live in the country you live in for insurance rates.
“In Ontario, insurance is privatized, which means many insurers are competing for your business,” he said.
“As a consumer, in fact, what you want to do every year is that you want to go online and shop, especially with an aggregator.
“The right insurance company is not necessarily the right insurance company for every consumer. Every consumer has unique needs and unique customer profiles.”
& Copy 2025 Global News, a division of Corus Entertainment Inc.
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