President Donald Trump's 25% tariffs on auto imports, which are set to take effect on April 3, are expected to have far-reaching effects on the automotive industry in the U.S. Even if you're not actively in the market for a new car, these new tariffs could impact the cost of owning and maintaining your vehicle. The tariffs, designed to boost domestic manufacturing and generate significant revenue, will raise the price of cars imported from foreign countries. But beyond the initial cost of purchasing a new vehicle, they are also set to increase the cost of car repairs, particularly those that involve foreign-made parts. This, in turn, is likely to push insurance premiums higher in the future as well.

One of the primary effects of these tariffs is an increase in the cost of auto repairs, especially as many vehicles on U.S. roads use foreign-made components. Jessica Caldwell, head of insights at auto-buying resource Edmunds, warns that consumers will see the effects of these price hikes in the coming weeks and months, particularly as the tariffs impact key parts like engines, transmissions, and electrical components. These parts are commonly used in repairs, which means that auto repair shops will likely pass on the increased costs to consumers.

The auto repair market in the U.S. has long depended on imported parts, with significant portions of these parts coming from major trading partners like Canada, Mexico, and China. According to industry data, around 60% of replacement auto parts used in U.S. repair shops are imported. With the new tariffs in place, consumers can expect to pay more for repairs, especially for foreign-made vehicles. Skyler Chadwick, director of product consulting at Cox Automotive, points out that the sourcing of parts varies between service providers, making it difficult to predict exactly when these price increases will hit, but it's likely to be soon.

For small business owners in the auto repair industry, the tariffs are already causing problems. Desiree Hill, owner of Crown’s Corner, an auto repair shop in Georgia, shares her frustrations over the impact of these tariffs on her business. She recently had a part for a vintage car canceled by a German manufacturer due to the tariffs. For shops like hers, where a significant portion of work involves foreign-made vehicles, the tariffs will likely lead to higher costs for parts and repairs. In order to stay in business, Hill says, these shops will have no choice but to pass those costs on to consumers.

In addition to increased repair costs, the tariffs are also expected to affect car dealerships. Joshua Allrich, who runs a used car dealership in Atlanta, anticipates that the tariffs will drive up the cost of cars, particularly economy cars, which form the core of his business. As dealerships are forced to absorb higher costs, they may pass those increases onto customers, making it harder for buyers to find affordable vehicles. Used cars are also likely to become more expensive due to higher repair and maintenance costs, as dealerships will need to spend more to service vehicles before reselling them.

Some dealerships and repair shops may attempt to stockpile parts in advance of the tariffs, but this strategy comes with risks. Stockpiling inventory can tie up capital and may not be a viable long-term solution, particularly if the tariffs are temporary or if manufacturers adjust their pricing. With the uncertainty surrounding these tariffs, small businesses in the automotive sector are faced with difficult decisions about how to prepare for the impact.

The increase in the cost of car repairs and vehicle prices due to the tariffs will also likely lead to higher insurance premiums. As auto repair costs rise, insurance companies will likely need to adjust their rates to account for the increased claims they’ll be paying out. Bob Passmore from the American Property Casualty Insurance Association estimates that personal auto insurance claims could rise by between $7 billion and $24 billion annually due to higher repair costs. While consumers may not see the impact of these changes immediately, analysts expect that it will take about 12 to 18 months for the effects to fully be reflected in insurance premiums. In fact, the Insurance Information Institute has already projected an increase in auto premiums by 7% in 2025, even before the full effects of the tariffs are felt.

For consumers, the combination of higher car prices, rising repair costs, and increased insurance premiums adds up to a significant increase in the total cost of vehicle ownership. While the tariffs were intended to stimulate domestic manufacturing and raise government revenue, the unintended consequence could be a more expensive experience for U.S. car owners.

As the new tariffs are implemented, car dealerships, repair shops, and insurance companies will face the challenge of adjusting to the higher costs associated with these changes. Consumers will likely find that their cars, both new and used, are more expensive to purchase and maintain, and this ripple effect could be felt throughout the entire auto industry. Despite the intended economic benefits of the tariffs, the long-term effects on U.S. drivers may be an uphill battle, with higher costs hitting many consumers at once.