Trump rates and car insurance: Will your premium explode?

Since April 2025, the Trump administration has imposed 25% tariffs on automobiles and auto parts imported into the United States, and Canada has retaliated with equivalent counter-tariffs. As a result, the price of new vehicles has jumped by an average of $6,000 CAD, replacement parts are 4 to 20 per cent more expensive, and insurers are adjusting their premiums upwards. In Quebec, where more than 70% of auto parts used in repairs are imported and can cross the border up to 8 times before final assembly, the impact is particularly felt. This article details the mechanics of the rates, the vehicles and parts most affected, the expected timing of the increases, and above all 10 concrete tips to protect your wallet. If you own a vehicle in Quebec, this information could save you hundreds of dollars on your next renewal.

Understanding Trump’s auto tariffs

What has happened since April 2025

On April 3, 2025, the Trump administration launched what many analysts call the largest auto trade war since the 1930s. Tariffs of 25% were imposed on all vehicles imported into the U.S., followed by identical tariffs on auto parts before May 3, 2025. Canada, the U.S.’s second-largest trading partner, immediately retaliated: on April 9, 2025, Ottawa announced 25% counter-tariffs on U.S. vehicles that did not comply with CUSMA.

The spiral did not stop there. On June 4, 2025, tariffs on steel and aluminum —two materials essential to automotive manufacturing—were raised to 50%. According to Protégez-Vous, an auto part can cross the Canada-U.S. border up to 8 times before being integrated into a finished vehicle — each passage potentially accumulating additional rights.

The result? According to JD Power, the average price of a new vehicle in Canada has increased by about $6,000 CAD, with some trucks showing increases of up to $8,000 USD. For Quebec motorists, these numbers aren’t just statistics — they’re reflected directly in the cost of their car insurance.

CUSMA: A Crumbling Shield

The Canada-United States-Mexico Agreement (CUSMA), which came into force in 2020, was supposed to ensure smooth auto trade in North America. In theory, vehicles that complied with the rules of origin (sufficient North American content) were to be exempt from tariffs. In practice, the Trump administration has interpreted these rules restrictively, excluding many vehicles and parts from the preferential regime.

The revision of CUSMA, scheduled for July 2026, will be a pivotal moment. It could either relax the exemptions or tighten them further. The Quebec government is closely following the negotiations, aware of the impact on the provincial economy and consumers’ purchasing power.

How Rates Are Driving Up Your Insurance Premium

The impact chain: from customs tariff to your invoice

The link between rates and your car insurance premium is not always obvious. Here is the mechanics:

The Insurance Bureau of Canada (IBC) couldn’t be clearer: “Tariffs will have an impact on insurance because they add additional costs to the goods used to replace and repair cars.” (source IBC)

Aaron Sutherland, vice-president of the IBC, explains: “New cost pressures created by the trade dispute are piling on top of other cost pressures in the auto insurance system.” In other words, the tariffs are on top of inflation already present in the system. According to Statistics Canada, the cost of auto parts had already risen by 22.3% between 2019 and 2024 — before the Trump tariffs.

The numbers that make you dizzy

The scale of the impact can be measured in concrete figures:

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• Deloitte for IBC: Vehicle and parts prices could rise by up to 10.9%
• Intact Insurance: Projected 12% increase in auto claims costs and 8% overall increase
• BAC / AIRB: increase in premiums of up to 5% in direct relation to fares
• Webbroker: premiums in Quebec have already risen by 13.7% between 2024 and 2025 (source)
• Accesdirect.com: the pace of acceleration of increases is 60% faster than before tariffs

Jocelyn Laflamme, vice-president of insurance at Desjardins, confirms that auto insurance will be “one of the most affected business lines” by this trade war. The reason is simple: every claim involves parts, and those parts are now more expensive for insurers to acquire.

Martin Boyer, a professor at HEC Montréal, adds an additional layer: trade uncertainty is devaluing the Canadian dollar, making imports denominated in U.S. dollars even more expensive. A multiplier effect that affects the entire automotive supply chain. To better understand why car insurance premiums are rising so much in Quebec, check out our detailed analysis.

What garages see in the field

Patrick Robichaud, owner of a garage in Quebec, reports increases of 4 to 20% on parts since the tariffs came into effect. “Some pieces that we ordered for $200 went up to $240 overnight, without notice,” he told Radio-Canada. These additional costs are absorbed either by the garage, the insurer or the consumer — and, ultimately, it is always the motorist who pays, directly or through his premium.

How Much Does It Cost: 2025 vs 2026-2027 Premium Comparison

To illustrate the concrete impact, here is an estimate of monthly car insurance premiums in Quebec according to driver profile. The 2026-2027 projections take into account rate increases, parts inflation and the trend reported by the Insurance Portal.

Sources: Sonnet (average QC ~$96/month), ClicAssure (+13.7% in 2025), Deloitte/BAC (+10.9% on vehicles/parts), Assur360 projections. Actual amounts vary by driving record, region and insurer. To find out your exact cost, check out our 2026 car insurance cost comparator.

The car parts most affected by the prices

Not all parts are equal when it comes to tariffs. Components with high technological value and those from complex international supply chains are experiencing the sharpest increases. Here is the detailed portrait:

The situation is particularly worrying for owners of electric vehicles. Lithium-ion batteries, which account for 30 to 40 percent of the cost of an EV, contain components that are subject to multiple layers of tariffs. The insurance of an electric vehicle, already more expensive due to the high value of parts, is likely to suffer above-average increases.

ADAS (driver assistance systems) are another aggravating factor. A simple snag that damages a sensor-equipped bumper can result in a repair bill 3 to 5 times higher than 10 years ago. With the tariffs, the gap widens further. To properly assess the protection of your vehicle, read our article on replacement cost car insurance.

Canadian-assembled vs. imported vehicles: the ranking

Where your vehicle is assembled directly influences the applicable customs tariff — and, by extension, the cost of your insurance. Vehicles assembled in Canada are exempt from tariffs on the vehicle itself, but not necessarily on their replacement parts. Here is the ranking:

Canadian-assembled vehicles (less affected)

Imported vehicles (most affected)

If you’re in the process of buying, choosing a Canadian-assembled vehicle like the Toyota RAV4 or Honda Civic could save you not only on the purchase price, but also on your long-term car insurance. For Ford owners, the situation is more delicate since the most popular models (F-150, Mustang, Bronco) are all assembled in the United States.

10 concrete tips to limit the impact on your premium

Despite the context, there are concrete levers to obtain cheaper car insurance. Here are 10 proven strategies, ranked by savings potential:

Timing: When will the hikes hit?

The impact of rates on your premium doesn’t happen overnight. Insurers operate on actuarial cycles and adjust their rates gradually. Here is the planned schedule:

What the July 2026 CUSMA Review Could Change

The July 2026 review of the Canada-United States-Mexico Agreement is the most defining event for the future of auto rates — and, by extension, your insurance premium. Three scenarios are emerging:

As Martin Boyer of HEC Montréal points out, uncertainty itself is a cost factor. It devalues the Canadian dollar, makes forecasting difficult for insurers and encourages them to “overprotect” their margins. Regardless of the outcome of the review, consumers should act now to optimize their coverage. Consult an insurance broker who can guide you through this uncertain environment.

The Autorité des marchés financiers (AMF) is also monitoring the situation closely. Insurers will have to justify any increase deemed excessive, which offers some protection to Quebec consumers. However, if claims costs actually increase by 10-12% as Intact projects, regulators will have no choice but to allow tariff adjustments.

Frequently asked questions