Tariffs imposed by the Trump administration are expected to lead to an increase in car insurance premiums due to higher costs for replacement parts. This is because many car parts, such as tires, are imported and subject to tariffs, causing U.S.-based tire plants to pay more for raw materials. The auto industry’s international supply chains mean that most vehicles are not entirely domestically built, with almost 7 in 10 new cars assembled abroad and 6 in 10 replacement parts imported. As a result of the tariffs, vehicles are flying off dealers’ lots as consumers rush to buy before prices increase. This has led to a decrease in vehicle inventory and an expected surge in demand for used vehicles, potentially driving up prices in that market as well. Drivers driving older vehicles may also see an increase in the cost of upkeep. Additionally, insurance policy renewals later in the year are expected to see price hikes, with New York and Florida projected to experience some of the steepest increases.
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