If the United States follows through with tariffs on steel and aluminum, Canadians could see a jump in auto insurance, according to the Insurance Bureau of Canada (IBC).
President Donald Trump has announced his plans to put 25 percent tariffs on all steel and aluminum imports, including from Canada, starting on March 12. Trump’s goal is to boost manufacturing in the United States.
However, the move could have trickledown effects, including a rise in car insurance costs for Canadians.
Steel and aluminum are widely used in vehicle manufacturing and in replacement parts for cars and trucks, IBC vice-president of strategy Liam McGuinty noted in a phone interview with The Epoch Times.
“Any tariffs on steel and aluminum would have a direct impact on the cost to service claims from both car accidents, but also property damage,” he told The Epoch Times.
He said that if insurers get a vehicle from the United States with steel and aluminum parts that are subject to the tariffs, the cost of the vehicle would increase. The insurer will need to pay more, he said, and as a result, the higher costs would get passed on to consumers.
“Because margins on auto insurance in many parts of Canada are so thin, insurers have a lot less flexibility to absorb any of those additional costs,” McGuinty said.
McGuinty said that another variable to consider is how long tariffs are in place, which could also continue to put added costs on insurance companies, and consumers.
”If those tariffs are prolonged, they would make insurance certainly more expensive.”
McGuinty said that insurance companies are under other financial pressures on top of the pending tariffs.
“It’s not just tariffs that are exerting pressure on insurance costs. It’s the rising frequency and severity of severe weather events in Canada,” he said. “It’s the increases that we’ve seen in inputs like the cost of lumber and the cost of metal materials.”
He said that over the past five years, the costs have been outpacing the rate of general inflation.
However, he said consumers don’t need to assume that a jump in insurance costs is automatic if tariffs are brought in, adding that there is “so much uncertainty.”
For consumers who may be concerned about increasing costs of insurance, McGuinty said it was important to discuss it with an insurance provider.
“Regardless of the context, if you’re concerned about your coverage or the cost of your coverage, talk to your insurance representative, find out what options are available to you.”
