​Recent developments have intensified trade tensions between the U.S. and Canada. On March 26, 2025, U.S. President Donald Trump announced a 25% tariff on all imported cars and light trucks not manufactured in the United States, effective April 2.

This move aims to boost domestic manufacturing but has raised concerns about increased vehicle costs and potential impacts on the car insurance cost landscape. The situation remains fluid, with ongoing reactions from international partners and market participants. ​

If these tariffs are implemented, Canadian drivers may experience higher auto insurance premiums due to increased vehicle and repair costs, impacting their auto insurance policy. For residents of British Columbia, particularly drivers insured through ICBC, staying informed about these developments is crucial. Here’s what you need to know and how to prepare for the potential impact.​

Why Could Tariffs Raise Car Insurance Premium?

The possibility of U.S. tariffs on Canadian auto imports has already created uncertainty in the market. A car insurance policy is essential for vehicle owners, and any changes in the market can significantly impact policy costs. If enacted, these tariffs could affect Canadian drivers in several key ways:

• Higher Vehicle Prices – If tariffs drive up the cost of importing and manufacturing vehicles, both new and used car prices in Canada could surge. Since insurers base their payouts on vehicle values, this could lead to higher premiums.
• Rising Repair Costs – Many auto parts used in Canada are imported from the U.S. or China. If tariffs make these parts more expensive, repair costs will rise, prompting insurers to adjust rates for collision insurance and other coverages.
• More Total Loss Claims – When repair costs exceed a vehicle’s value, insurers may declare it a total loss. Higher vehicle prices and expensive parts could lead to more total loss claims, increasing premiums across the board.
• ICBC Rate Adjustments – As a public insurer, ICBC adjusts rates based on overall claim costs. If vehicle and repair costs rise due to tariffs, ICBC could increase premiums to maintain coverage levels.

How You Can Prepare and Lower Your Car Insurance Costs

While tariffs and insurance rate hikes are beyond drivers’ control, there are steps you can take to manage costs:

Reviewing your car insurance policies and obtaining car insurance quotes from different providers can help you find the best rates. This can help you understand the accident benefits included in your policy, which provide financial support for medical expenses and other costs related to injuries from car accidents.

1. Review Your Coverage – Consider whether you need comprehensive insurance or collision car insurance coverage on older vehicles. Dropping unnecessary coverage can lower your premium. Comprehensive coverage can protect against non-collision-related incidents, which might be worth considering for newer vehicles. Additionally, consider optional coverage such as endorsements or ride-sharing insurance to enhance your protection.
2. Increase Your Deductible – ICBC allows policyholders to choose higher deductibles for comprehensive and collision coverage, which can lower your car insurance quote. However, the available options depend on your specific policy and driving history, so be sure to check what’s available to you.
3. Take Advantage of Discounts – ICBC offers discounts for safe driving, bundling home and auto insurance, and installing anti-theft devices. Different insurance companies offer various discounts, so it’s worth shopping around to find the best deal.
4. Drive a More Affordable Vehicle – If you’re in the market for a new car, consider vehicles with lower repair costs and better safety ratings to keep insurance premiums manageable.
5. Maintain a Clean Driving Record – Safe driving habits help keep your rates lower over time.
6. Consider Usage-Based Insurance (UBI) – ICBC’s Drive Smart program may reward good driving behavior with lower premiums.

The Bottom Line

While the full implications are still unfolding, Donald Trump has officially announced a 25% tariff on all imported cars and light trucks not manufactured in the U.S.—a move that could heavily impact Canadian auto exports. Although specific details around enforcement and exemptions are still emerging, the announcement has raised serious concerns about rising auto insurance costs in Canada.

Businesses that rely on fleets or company vehicles should also prepare for potential increases in commercial car insurance premiums. With inflation, supply chain disruptions, and claim frequency already putting upward pressure on rates, new tariffs could further amplify these costs. Staying informed about these developments can help drivers and businesses make smarter coverage decisions in the months ahead.

At King Insurance, we are a local insurance broker dedicated to helping Canadian drivers navigate these changes with personalized guidance and expert advice on their insurance policies. Additionally, having coverage for an uninsured driver can protect you from financial loss in case of an accident with someone who lacks insurance.

Choosing a Canadian insurance broker is more important than ever, ensuring that your insurance coverage, including optional coverages, is tailored to local market conditions and economic shifts. Uninsured motorist coverage is also crucial for safeguarding against hit-and-run incidents and accidents caused by drivers without insurance.

If you have questions about your policy or need help finding the best coverage, contact King Insurance today.