Tariffs imposed by the Trump administration could increase claims costs for property and casualty insurance by $10 bn to $36 bn, according to the American Property Casualty Insurance Association (APCIA).
On Feb. 1, the administration set a 25% tariff on imports from Canada and Mexico and a 10% tariff on Chinese imports, according to a White House statement. The administration later paused Canadian and Mexican tariffs after agreements on border security.
The administration also signaled it might impose a 100% tariff on imports from Brazil, Russia, India, China, and South Africa, known as the BRICS nations, the APCIA said.
“President Trump sees tariffs as a negotiating tool,” said Jimi Grande, senior vice president of federal and political affairs at the National Association of Mutual Insurance Companies, in an emailed statement. “Any increase in costs for parts or construction materials will have a downstream effect, but uncertainty makes it difficult to predict the final impact.”
Personal auto insurance would likely face the most significant cost increases, potentially rising by $24bn, the APCIA said.
60% of replacement parts used in U.S. repair shops come from Mexico, Canada, and China. Tariffs could disrupt the supply chain, increasing repair times and adding costs for storage fees and rental cars.
Higher import costs could add $3,000 to the price of a new car due to increased production costs in the U.S., the APCIA said. Cars cross borders multiple times during manufacturing, meaning one vehicle could be hit with multiple tariffs before final assembly. Commercial auto insurance would also be affected, the APCIA said.
While auto insurance would see the largest impact, most property and casualty lines would also face higher costs due to reliance on imported materials. Construction costs would rise, making rebuilding efforts from disasters like the Los Angeles wildfires and hurricanes Helene and Milton more expensive.
To estimate the total impact, the APCIA calculated effects on personal auto insurance, then projected that other property and casualty lines would face half that impact.
Trade groups raised similar concerns when Trump imposed tariffs in his first term, estimating a $3.4bn increase in auto repair costs.
These estimates only account for direct effects, but APCIA noted that other factors, such as shifts in manufacturing or consumer behavior, could also influence costs. Tariffs on fuel could further raise prices for goods and services.
