A coalition composed of auto insurers has warned that the Trump administration’s plans to increase tariffs on imported car parts could cause a chain reaction that would ultimately hurt consumers.
The coalition – composed of the American Insurance Association, the National Association of Mutual Insurance Companies and the Property Casualty Insurers Association of America – said that hiking tariffs on imported auto parts by 25% could increase auto insurance premium costs by 2.7%, or $3.4 billion annually.
“The imposition of tariffs could likely lead to the filing of hundreds, if not thousands, of requests for rate increases by insurers with insurance regulators across all 50 states,” the coalition said in a joint statement recently submitted to the US Commerce Department.
Another side effect of the increased tariffs is that insurers might not be able to quickly acquire replacement parts for policyholders, leading to delays and increased costs, the coalition argued.
“Motor vehicle theft rates could well rise, as many stolen vehicles are sold for their parts,” the coalition added.
All three associations agreed consumers will ultimately bear the higher repair costs resulting from the tariff hike.
Reuters reported that the US Commerce Department will soon hold a hearing regarding the potential financial impact of the increased tariffs.
A spokesperson for the agency told Reuters that while the department has no comments regarding the coalition’s statements, it would send a report to the White House after “collecting all the facts, and completing a careful analysis.”
“While we aim to complete the investigation and report to the President within a couple months, no proposal for action has yet been made,” the spokesperson said.
