Driving is about to cost a bit more. Anticipated customs duties may drive up car insurance rates by nearly 10% later this year.
This change stems from a 25% tariff on imported vehicles and their components. As the costs for these parts rise or take longer to arrive, the expense of repairing vehicles will also increase.
Nevada currently has the highest car insurance rates in the nation, which is not great news for new drivers or auto body shops.
Eric Randolph, co-owner of Izzy’s cars, directly experiences these tariff impacts. Inflation has ticked up slightly in April, which coincides with the tariff implementation.
“It’s a lot of price increases, and that forces us to adjust our client rates,” Randolph explains.
This surge in costs is primarily due to the trickle-down effect from their suppliers.
“You have a real supplier that goes to a vendor, and then prices rise as vendors sell to various shops and customers. By the time it reaches the consumer, you’re looking at around a 100 to 110% markup just so small businesses can stay profitable,” he adds.
Not only are foreign auto parts becoming pricier, but the supply chain is also facing delays. Randolph noted that the wait time for vehicle repairs has increased significantly. “What used to take just a few days is now taking four weeks,” he remarked.
The escalating costs of auto parts are tightly linked to insurance premiums.
“If you have an accident, insurance will cover the replacement costs. When parts are expensive because they’re imported, those costs typically shift to consumers. The average price of a popular new car has risen by approximately 15% due to these tariffs,” he stated.
These price hikes are leading people to reconsider their vehicle choices. “More customers are turning to rental services because they’re finding it hard to buy a car,” says Deandre Johnson, owner of JS RideShare rentals.
His rental service is also grappling with rising prices and longer delays for parts, yet business is thriving. “We’re attracting more customers, which has boosted our business’s worth as car prices continue to rise,” Johnson said.
Experts in insurance believe that while companies can’t adjust prices instantly, most consumers won’t notice changes to their premiums until the end of the year.
