SAINT PAUL, MN:  The Minnesota Department of Commerce is warning residents that recent and impending federal tariffs could significantly raise the cost of your car or truck.

Tariffs on car parts from Canada and Mexico, as well as additional tariffs on parts from China, are set to take effect in April 2025. These measures are expected to further strain the cost of repairing and insuring your car. According to the American Property Casualty Insurance Association (APCIA), nearly 60% of auto replacement parts come from these countries. Increasing costs for these parts will likely increase the price of repairs, which also drives up insurance claim costs.

“U.S. tariffs, whether enacted or threatened, could increase the cost of maintaining and insuring your car,” said Commerce Commissioner Grace Arnold. “This is a manmade crisis that will make it more expensive for everyday Minnesotans to drive.”

The Insurance Federation of Minnesota cites several factors pushing up auto insurance premiums: Higher costs for car repairs, the impacts of climate change with more extreme weather such as hailstorms increasing insurance claims, as well as legal lawsuits. As the APCIA noted, U.S. tariffs add another layer of costs for auto insurance.  

According to a study by the APCIA, claims costs for personal auto insurance could rise between $7 billion and $24 billion, with the total impact for consumers expected to be even higher. As auto insurance costs often correlate with vehicle prices, insuring your car may become more expensive if insurance companies face higher claim payouts due to increased repair and replacement costs.

These tariffs are also likely to impact auto insurance premiums. Increased costs for auto replacement parts and new vehicles may lead insurers to raise rates to cover higher claims expenses. While the Minnesota Department of Commerce regulates insurance rates, insurers can adjust rates by filing updates, which the department reviews to ensure they reflect actual risks and costs. Consumers may face higher premiums upon policy renewal, typically every six to 12 months.

“Minnesota’s auto insurance market is competitive, allowing consumers to shop for lower premiums. However, insurance markets depend on stability and predictability to offer consumers comprehensive insurance at affordable prices. These tariffs will likely make it more expensive for Minnesotans to get to work, take their kids to childcare, and drive across our state,” Arnold said.

The Minnesota Department of Commerce advises residents to stay informed about these developments, review their policies and consider how potential increases in vehicle and insurance costs could affect their personal budgets.

Connect with the Minnesota Commerce Department
Get updates and news from the Minnesota Department of Commerce by following Commerce at mn.gov/commerce or @MNCommerce on social media.

Contact
Mo Schriner
Minnesota Department of Commerce
651-363-1227
mo.schriner@state.mn.us