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Tariffs on imports may hike insurance

Auto rates in New Jersey could increase by $72

By; Daniel Munoz
NorthJersey.com
USA Today Network - New Jersey

..... Amid whiplash over developments on tariff orders form the Trump administration, including another month-long delay for tariffs to kick in on imports form Canada and Mexico, experts are warning hat the levies could affect prices in an unexpected area: car insurance.
..... A 25% tariff on imports from Canada and Mexico would increase the price of auto insurance in New Jersey by $72, to $2,710, by the end of 2025, warns a recent report by Insurify, which compares the prices of different insurance policies.
..... That's up from an average yearly premium in 2024 of $2,488, Insurify says.
..... And it's based on the assumption that companies importing auto parts from Canada and Mexico will tack on the cost of tariffs.
..... Separately, Trump imposed 20% tariffs on imports coming form China.
..... Other factors raising the costs include inflation and the fact that people are driving more after the lock-downs during the COVID-19 pandemic, causing more traffic and more accidents, said Matt Brannon, who authored the Insurify report. As a fairly dense, urbanized state, new Jersey is affected more than other areas by a surge in drivers and traffic. Crashes have been trending upward in New Jersey since 2020, he said.
..... Insurers also have to account for theft and vandalism claims when pricing premiums. The New York-Newark -Jersey City metro area reported over 33,500 car thefts in 2023, Brannon said.
..... Auto insurers in New Jersey, which must get approval from state regulators for any rate hikes, requested increases of as much as 63.1% last April, [2024] thanks to inflation and costlier parts due to the more elaborate and sophisticated designs of automobiles.
..... Critics have pushed back on auto insurance hikes, labeling them corporate greed, and argued that state governments could play more of a watchdog role with these increases.

Why would auto insurance go up?

..... The potential tariff-driven auto insurance increases would be the result of a complicated global supply chain involving car parts are manufactured partially or entirely in Mexico or Canada.
..... Some parts are sent back and forth over the U.S. border and into different counties as the car parts are manufactured, even if the components are partially made in the U.S., CNBC reported.
..... Six out of every 10 auto replacement parts come from Mexico, Canada or China, February [2025] data from the American Property Casualty Insurance Association showed.
..... "When most people think of tariffs, they think of goods, like food, fuel or clothing,' Brannon said. "But tariffs could also cause prices to increase for car insurance."
..... "If auto parts prices rise, insures will pay more for repair claims and will ultimately pass those costs on to consumers through higher comprehensive and collision coverage rates,' the report reads.
..... In 2024 some brands, including Tesla, sourced as much as 81% of their parts in the U.S. according to data complied by American University, while Honda sourced 63% of its parts domestically.
..... Others such as Hyundia and Kia, sourced just 17% of their parts domestically. Nisan sourced 24% of its parts in the U.S. and Toyota sourced 29% domestically.

Talk of tariffs triggers fears of economic woes

..... Tariffs are essentially taxes on imports, and economists generally agree that the cost gets passed on to consumers, which can drag down the economy.
..... Trump and his administration dismissed fears that tariffs could trigger a recession but conceded that there could be some higher prices.
..... "Absolutely not," Commerce Secretary Howard Lutnick told NBC's "Meet the Press" on Sunday. [03/09/2025]
....."There's going to be no recession in America."
..... Stephen Moore - a former Trump economic adviser - suggested that Americans could feel the impact of tariffs on their wallets.
....."Tariffs are taxes," he told NorthJersey.com during a March 6 [2025] interview. "If you raise taxes on shoes coming in from China, you're going to pay more for shoes.

Cars overall more expensive

..... The average price for a new car was $49,470 in 2024, Kelley Blue Book data showed.
..... A study released last August [2024] by personal finance website Bankrate found that New Jersey motorists on average spend $6,802 a year on a car, versus the national average of $6,684.
..... For New Jersey, the costs included: * $2,412 on insurance coverage
* $1,682 on taxes.
* $1,214 on maintenance.
* $1,494 on gas.

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