Insurance industry analysts, economists, and trade associations have continued to look at the potential effect of President Trump’s tariffs.
About a month after Trump looked to impose steep tariffs on China, Mexico, and Canada, the administration on April 2 applied at least a 10% tariff on all exporters to the U.S.—with dozens of countries seeing higher, in some cases much higher, tariffs. Plus, a 25% tariff applies to all imported cars and parts.
Updated news, April 9: Trump Temporarily Lowers Tariffs for Most Countries, Raises Them for China
The stock market has since been in turmoil as investors deal with rumor, hear from business leaders, and try to figure out the ultimate effect.
The industry in March reacted to Trump’s tariffs on China, Mexico, and Canada by saying they would have a negative effect—particularly on U.S. homeowners and auto insurance. American Property Casualty Insurance Association (APCIA) CEO David A. Sampson said at the time that the trade association recognized tariffs as “effective tools of government” but added that the tariffs are “so broad that they are likely to hurt families, individuals, and business owners they are meant to protect.”
When reached for comment on the broader levies announced on “Liberation Day” April 2, APCIA said consumers could see an impact to their insurance bill in 12 to 18 months, and that the organization has estimated an annual rise in personal auto insurance claims costs of between $30 billion and $60 billion.
“Given insurers’ expenses beyond the direct cost of claims, the total premium impact will likely be higher,” APCIA said via bullet-point notes sent to Insurance Journal. “As the estimates are based on insurance data, given the number of uninsured motorists, or those that do not carry collision or comprehensive coverage for property damage to their own vehicle, the total impact on consumers is expected to be even higher.”
In a post on LinkedIn, Sampson said APCIA “has been informing federal policymakers about the potential impact of tariffs.”
Commercial auto claim costs are also expected to be impacted. APCIA also called out construction insurance because materials such as steel and lumber are expected to increase, but much of its initial focus was on auto—with about a third of the insurance industry’s total premium.
Citing Wall Street analysts, APCIA said the price for new cars would increase $4,000 to $15,000. About 60% of auto replacement parts come from Mexico, Canada, or China, and repairs will take longer if the supply doesn’t come from other countries.
Michel Leonard, economist for the Insurance Information Institute (Triple-I), said economic dislocation such as in open trade “would have the most significant impact on underlying growth and replacement costs for personal auto and homeowners insurance.”
