Experts warn of global shift that could cause car insurance prices to skyrocket: 'Already impacting the industry'

Insurance industry experts are bracing for impact following President Trump's tariff announcements. 

The president recently signed an executive order delaying 25% tariffs on many imports from Canada and Mexico, per CNN. Meanwhile, tariffs on imports from China have already gone into effect, the New York Times reported. And tariffs of 25% on all foreign steel and aluminum imports still took effect on March 12, per the Times. 

What's happening?

Mexico and Canada are among the United States' biggest steel trading partners, and Canada is the biggest aluminum supplier, Insurance Business reported. So, additional tariffs on these nations, even if delayed, are a concern for these industries, as are international tariffs more broadly. Kenneth Saldanha, senior managing director at Accenture, revealed that geopolitical instability is impacting insurance companies, including auto insurance. 

"Ongoing supply chain disruptions — whether from tariffs, COVID-19, or a port strike — are already impacting the industry," Saldanha said, per Insurance Business in February. "These disruptions drive up costs for auto parts, building materials, and other essentials, leading to higher indemnity expenses." 

Saldanha also mentioned that insurance growth is closely tied to gross domestic product. GDP could be impacted during a global trade war, which means insurance would likely be affected, too.

Tariffs could have a negative impact on the environment as well. China and Canada have already announced retaliatory tariffs in response to the U.S., NPR revealed. According to Forbes, scientists suggest that a scenario with retaliatory tariffs can significantly increase the risk that rising global temperatures and extreme weather events will not be addressed properly. 

Why is the impact of tariffs on insurance important?

If the new tariffs cause car insurance prices to increase, drivers will yet again have to pay more for coverage. 

A recent report from Insurify indicated that car insurance rates spiked 15% last year. On average, as of the January report, drivers paid $2,313 in most states. Rising prices are particularly concerning for drivers of electric vehicles. 

EVs can have higher insurance premiums. According to the National Association of Insurance Commissioners, EV insurance can cost up to 20% more than insurance for a gas-powered car, CNBC reported. 

What's being done about insurance rates, and how can drivers prepare?

According to Insurance Business, insurance executives are aiming to keep cost-cutting measures a top priority as the tariffs go into effect.

If you were going to purchase an EV, which of these factors would be most important to you? Cost 💰 Battery range 🔋 Power and speed 💪 The way it looks 😎 Click your choice to see results and speak your mind.

EV drivers can compare rates to find the best insurance deal. Driving history, annual mileage, and other factors are used to determine insurance prices.

Despite the potentially higher cost of insurance, choosing to purchase an EV can help car owners save money due to the lack of gas and maintenance required. Some EV models even qualify for a $7,500 tax credit, per Car and Driver — at least as long as this incentive lasts.    

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