NEW YORK — The impending 25% tariffs on automotive imports imposed by U.S. President Donald Trump are likely to raise costs for car owners, even those not in the market for a new vehicle.
These tariffs, which are scheduled to begin on April 3 and will expand in subsequent weeks, are anticipated to increase the price of imported cars by several thousand dollars. Additionally, vehicles requiring foreign-made replacement parts could also see maintenance costs surge, potentially leading to higher insurance premiums in the future.
While the White House argues that these tariffs will boost domestic manufacturing and generate $100 billion annually, economists warn of significant turbulence within the global supply chain of the auto industry. This disruption will likely compel car dealerships and repair shops to increase their prices, resulting in higher expenses for routine maintenance across the nation.
So, what does this mean for your next car repair? The impact largely hinges on your specific repair needs and the servicing outlet you choose. However, industry analysts caution that drivers could soon witness rising costs within weeks or months.
According to Jessica Caldwell, leader of insights at auto-buying resource Edmunds, many cars require parts sourced from abroad, making them susceptible to cost hikes due to tariffs.
Trump’s tariff proclamation specifically mentions engines, transmissions, powertrain parts, and electrical components—all integral to car repairs. While automakers might develop pricing strategies for new vehicles affected by tariffs, they are unlikely to absorb the increased costs of individual parts, potentially leaving consumers to foot the bill.
The U.S. car repair market is heavily reliant on imports from major trading partners such as Mexico, Canada, and China. Data from the American Property Casualty Insurance Association reveals that approximately 60% of auto replacement parts used in the U.S. are imported.
Skyler Chadwick, director of Product Consulting at Cox Automotive, explains that parts are sourced globally, complicating the timeline for when consumers can expect price increases due to the tariffs.
Desiree Hill, the owner of Crown’s Corner, a repair shop in Conyers, Georgia, reports that her business is already feeling the impact of the tariffs. She experienced cancellations on international part orders due to tariff complications, making it challenging to service the foreign-made vehicles, which account for half of her clientele.
Over recent years, car repair costs have risen due to higher labor expenses and pricey components for advanced technology vehicles. Edward Salamy, executive director of the Automotive Body Parts Association, points out that car manufacturers often limit alternate part and process options, leading to increasing pricing pressures, which tariffs will only exacerbate.
Car dealerships face their own struggles with the looming tariffs, as illustrated by Joshua Allrich of Allrich Auto in Atlanta. He is concerned about managing higher costs and maintaining affordable vehicle options for customers. While dealers eagerly anticipate a potential rush to buy before tariffs take effect, adjustments to business models and transparent communication with consumers about rising costs will be critical.
To mitigate immediate impacts, some dealerships and repair shops may preemptively stockpile frequently-used parts. However, this strategy carries risks, especially for small-business owners faced with capital constraints and the unpredictable longevity of the tariff measures.
The effects on insurance premiums could take 12 to 18 months to manifest, as tariffs contribute to higher repair claims costs, eventually influencing policy rates. While it’s uncertain how large insurers are preparing for these changes, the American Property Casualty Insurance Association estimates that auto claims costs could rise significantly—by as much as $24 billion annually.
Despite the timeframe for insurance hikes, the net costs of car ownership, from repair to insurance, appear poised to increase, underscoring the broader economic ripples of these auto tariffs.
The pronounced effects tariffs can have on overall ownership cost and not just purchasing vehicles emphasize the complex ramifications of these policies and their potential to affect consumers nationwide substantially.