Proposed 25% tariffs on imports from Canada and Mexico, including auto parts, could push auto insurance premiums even higher, according to a new study by Insurify. The insurance comparison site warned that rising replacement part costs would force insurers to raise premiums, adding to financial pressure on drivers, as first reported by the Houston Chronicle.
President Donald Trump announced the tariffs earlier this month, later agreeing to a 30-day pause. While the delay provides temporary relief, industry experts fear that prolonged uncertainty could disrupt supply chains and further raise costs for consumers. Insurify’s report suggests that a back-and-forth on tariffs might lead importers to hold off on stocking auto parts, impacting repair availability and pricing.
The average nationwide cost of full coverage car insurance reached $2,313 in 2024. Insurify had initially projected a 5% increase in 2025, but tariffs could push that up to 8%, resulting in an average premium of $2,502—a nearly $200 jump.
As repair costs rise, tariffs on auto parts from Canada and Mexico could exacerbate the situation. Insurify’s analysis points out that U.S. imports around 32% of auto parts from these countries, and parts make up about 60% of a repair bill. Since vehicle damage costs account for roughly 60% of full-coverage insurance prices, even a modest increase in part costs could significantly impact premiums, especially in states like Texas where insurance rates are already above average.
In 2024, the average annual premium for full-coverage car insurance in Texas was $2,712, placing it between California ($2,416) and Colorado ($2,337) in the ranking of states with the most expensive rates made by Insure.com, suggesting Texas would rank fourth. While tariffs are expected to cause a 6% increase in rates in 2025, the cost could rise by 9% if they are implemented, pushing premiums close to $3,000 and potentially adding $79 to drivers’ premiums due to the impact of tariffs.
Texas drivers have already endured a 42% increase in auto insurance premiums from 2022 to 2024, with the proposed tariffs on imports from Canada and Mexico threatening to push rates even higher. Insurify projects that tariffs could drive premiums up by 9% in Texas in 2025, compared to the previously expected 6% increase, potentially raising the average full-coverage cost to nearly $3,000. This mirrors trends in the home insurance sector, where inflation and extreme weather have inflated costs, underscoring the potential strain on Texas households and the automotive industry.
The proposed tariffs on auto parts from Canada and Mexico could have a far-reaching impact, driving up both repair costs and insurance premiums for drivers, particularly in Texas. With an already steep rise in auto insurance rates, the added financial strain from tariffs could significantly affect household budgets across the state. As supply chain disruptions and rising costs become more pronounced, it is crucial for policymakers to consider the broader economic implications of these tariffs, especially for consumers already grappling with inflationary pressures.
