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It makes sense that tariffs on imported cars will lead to higher prices. But did you know that tariffs also push up prices of car parts from around the world, and that in turn will drive up car insurance? NPR's Camila Domonoske explains why.
CAMILA DOMONOSKE, BYLINE: Tariffs on auto parts specifically are looming, but tariffs on steel, aluminum and imports in general are driving up prices already. Lawrence Spence (ph) works at a NAPA Auto Parts shop in Desert Hot Springs, California.
LAWRENCE SPENCE: Brake pads normally come from Mexico. We have suspension parts that come in from Turkey, from Thailand. A lot of our tool sections come from Taiwan. And then I'm also in charge of price changes, you know, for the labels.
DOMONOSKE: So you're literally changing the prices on the shelf?
SPENCE: Every day.
DOMONOSKE: Pre-tariffs, he'd swap out some prices at least once a week, often for sales. Now it's daily and mostly going up. Spence owns two older cars, and he's been buying up parts for himself.
SPENCE: Absolutely, yeah. So belts, ball joints, control arms - I'm just kind of stockpiling on nearly everything that I will need in the future as a just in case.
DOMONOSKE: When parts get more expensive, that pushes up the cost of repairs and maintenance. And when the cost of repairs goes up, that's a big expense for insurance companies. Jessica Caldwell is the head of insights at the auto data company Edmunds.
JESSICA CALDWELL: Any time that you're in a collision and your vehicle needs to be repaired, there requires parts, perhaps some aluminum or steel if you've damaged the outside portion of your vehicle. And all that's going to lead to is higher insurance costs.
DOMONOSKE: Higher insurance costs because if insurance companies have to pay more for repairs, they're going to charge more in premiums. That's fundamentally how insurance works, right? It spreads the cost out among a big pool of people, even if you personally don't get in a crash. And this is true even if you have the bare minimum insurance. Shannon Martin is an insurance expert at Bankrate.
SHANNON MARTIN: If you're someone who has an older car that's liability only, you might think, well, my rate's going to stay the same. But it won't because you have a property damage coverage on your policy that pays for someone else's vehicle. That is now going to cost more to fix.
DOMONOSKE: Something similar happened during the pandemic. Supply chain disruptions meant fewer vehicles and car parts available, and prices soared. A year or two later, insurance premiums soared, too, up 20% in a single year. As of this year, those rate hikes had finally settled down.
MARTIN: But the tariff situation really kind of throws a monkey wrench into everything.
DOMONOSKE: Now, there's a baked-in delay before insurance costs would rise. State regulators will try to protect ratepayers from unreasonable hikes, and current rates are locked in until your policy renews. But Martin warns, eventually, higher costs get passed along. President Trump says the goal of these tariffs is partly to encourage manufacturers to move to the U.S. Although, he also keeps changing the rules with exemptions and reprieves and dealmaking. That makes it hard for companies to plan and hard for drivers to know what to expect from, say, their insurance rates.
MARTIN: So any numbers that people give you are just guesses. That can change at any moment because everything is so unpredictable right now.
DOMONOSKE: In these unpredictable times, some age-old advice is still reliable. Spence recommends having a trusted mechanic. Caldwell reminds folks to shop around. And Martin says, as always, drive carefully, y'all. A good driving record is one of the best things you can control to keep your rates down.
Camila Domonoske, NPR News.
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