A threat by the U.S. government to impose tariffs of up to 25 percent on imported vehicles parts could hit customers in unexpected ways: higher repair costs, insurance premiums and even the theft of more vehicles for their parts, the industry stated.
U.S. President Donald Trump’s administration has started an investigation into whether auto imports pose a national security threat and cautioned to slap the tariffs on vehicles from the European Union and elsewhere.
A coalition of auto insurance groups stated in earlier unreported comments that hiking tariffs on imported auto parts by 25 percent could raise costs by 2.7 percent, or $3.4 billion yearly, for personal auto insurance premiums.
The U.S. Commerce Department will hold a hearing about the issue on Thursday.
Consumers will bear basically all the higher repair costs, stated the American Insurance Association, National Association of Mutual Insurance Companies and Property Casualty Insurers Association of America in remarks jointly submitted to the Commerce Department.
“The imposition of tariffs could likely result in the filing of hundreds, if not thousands, of requests for rate increases by insurers with insurance regulators across all fifty states,” the groups stated.
Insurers stated they might not be able to swiftly get replacement parts for policyholders, “resulting in delays and increased expenses.”
“Motor vehicle theft rates could well increase, as many stolen vehicles are sold for their parts,” the groups included.
A Commerce Department spokesman did not stated anything Wednesday on the industry statements, but informed the agency would send a report to the White House following the collection of “all the facts, and completing a careful analysis.”
“While we aim to finish the investigation and report to the President under a couple months, no proposal for action has yet been made,” the department stated.
In separate comments to the Commerce Department, the Auto Care Association, that represents 150,000 manufacturers, distributors and sellers of motor vehicle parts and related goods, that its economic study counted that the cost of car ownership would increase by over $700 per year every household should the tariffs be imposed.