DENVER — President Trump's 25% tariffs on imported cars and car parts are expected to go into effect this week. While there is concern over higher car prices, experts explain it would also impact used car prices, replacement car parts, and insurance policies.
Former CEO of the Colorado Automobile Dealers Association Tim Jackson explained the tariff would impact a price of a car even if it was built in the United States, as many parts come from outside the country.
"So the automotive industry is really an internationally based industry where parts for those cars come from all over the world, and the factories, the manufacturers of those cars are bringing the parts in from where they can build it or, buy those parts the least expensive," Jackson explained. "So now if those have if the parts have a, because they come from a, a different country, if that country has a 25% tariffs because you're bringing them to the US, those will eventually drive up the price on the new car."
Jackson shared he has spoken to several dealers over the past couple of days who are frustrated over this tariff and how it would drive up the price of a new car.
"So I don't know any dealers that really like the tariffs, because the dealers want to be able to sell the consumer the car at the lowest price possible, they always have and they always will and the tariffs really go against that credo and that theory, philosophy and belief," Jackson said.
Even with the dealership closed on a Sunday, people still stopped by to look at cars and check out the prices. Chad Truemper was spotted in the dealership lot. He explained not only is buying a car a big decision, but now there is "some timeliness to it."
"It's a big purchase still, I mean when the price of cars some of them rival what a mortgage used to be, now mortgages are way up. So yeah, it's a big decision to make and sort of, you know, be pressured into it knowing it's a $10,000 difference potentially," Truemper said.
While these tariffs could impact the price tag of a new car, car insurance rates are predicted to increase too. Executive Director of Rocky Mountain Insurance Association Carole Walker shared that car insurance premiums are predicted to increase by 7%.
"We were starting to see auto insurance premiums stabilize, right now with these tariffs, that's going to add on additional costs that insurance companies had not anticipated," Walker explained. "So beyond with it, costs are now to repair our high-tech vehicles, now they're going to be looking at higher costs for imports of parts steel, aluminum, all of those things are going to have a trickle-down effect on what we pay for car insurance."
In response to these higher costs, Walker is concerned people will not purchase insurance making roadways even more dangerous.
"Big advice to everyone right now is don't cut corners on your insurance, but unfortunately, this extra pressure from tariffs on car insurance could increase our uninsured motorist population, put more people uninsured and underinsured, and put everybody else with insurance at risk being hit by an uninsured driver," Walker said.
The White House reports the reasoning behind the tariffs on imports of cars and car parts stems from President Trump "taking action to end unfair trade practices that jeopardize U.S. national security" and "will protect and strengthen the U.S. automotive sector."
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