Tariffs hit auto repair costs hard, add uncertainty, say experts

By Doug Bailey

The Trump administration’s sweeping tariffs on imported goods is perhaps impacting the automotive and insurance industries like no other – prompting higher repair costs, shifts in consumer behavior, and increased demand for used and recycled parts. That was the central message from Ryan Mandell, Director of Claims Performance at Mitchell International, during an online seminar hosted this week by the Collision Industry Electronic Commerce Association (CIECA).

The 25% tariffs – initially applied to imported steel and aluminum and now extended to whole vehicles and certain auto parts – are being enacted under Section 232 of the Trade Expansion Act. The policy, justified on national security grounds, aims to incentivize more domestic automotive manufacturing. Yet for insurers, body shops, and consumers, the practical effects may be anything but secure.

“This is a volatile, rapidly changing situation,” Mandell warned. “What we know today could be out of date tomorrow.”

That insecurity and unpredictability is spreading to investment and consumer industries as well, which are reacting to the dizzying developments on tariffs with increasing trepidation.

Uncertainty makes planning ‘nearly impossible’

“The uncertainty of what the near future holds or what these tariffs will do to our consumer-driven economy makes planning or investing nearly impossible,” said Richard McWhorter, private wealth advisor and managing partner at the Beverly Hills-based SRM Private Wealth. “Retirement confidence is especially affected for those with shorter timeframes before an investor retires or needs to access funds. How does one plan on anything when all these massive and unprecedented changes are occurring?”

That was a recurring theme during the hour-long CIECA webinar, which focused on vehicle and auto parts importation and the strategies manufacturers and vendors use to mitigate these effects. While the U.S.-Mexico-Canada Agreement (USMCA) exempts most North American-made parts and vehicles, only about 50% of imported parts meet USMCA compliance. That means significant portions of today’s auto supply chain – especially from Asia – are now exposed to the new tariffs.

‘Domestic’ brands aren’t immune

Even some “domestic” brands aren’t immune. Mandell highlighted the 2025 Chevrolet Trailblazer, which has more than 50% Korean components and is assembled in Korea – making it fully subject to the new tariffs. Similarly, certain Toyota and Honda models rely heavily on Japanese manufacturing, placing them at risk.

“It’s no longer sufficient to look at the badge on the hood,” Mandell said. “You have to look at individual models to assess tariff exposure.”

Using the 2025 Hyundai Elantra as a case study, Mandell showed how a 25% tariff on its wholesale import value could raise its MSRP by roughly $5,000 – an increase of more than 20%. Consumers, already contending with inflation and economic uncertainty, are expected to pivot toward the used vehicle market.

That shift is already underway. Cox Automotive data show that new vehicle supply days dropped from 91 in March to 70 in April, as consumers rushed to buy before tariffs fully hit. As a result, used car prices could rise 5–10% over the coming year, with longer vehicle retention likely to push the average age of vehicles on U.S. roads beyond the current 12.5 years.

More repairs, fewer total losses

Interestingly, higher new and used vehicle prices could make repairing a car more cost-effective than declaring it a total loss—particularly for borderline cases. Mandell projected a 1–3% decrease in total loss frequency, driven by rising actual cash values of vehicles and a wider repair threshold under standard 70% actual cash value metrics.
“More borderline vehicles will get pulled into the repairable channel,” Mandell noted. “But the increase in repair costs won’t fully negate that shift.”

Not all parts are affected equally. Mandell clarified that structural and outer body sheet metal – like fenders, doors, and bumper covers – are exempt from the new tariffs. However, electrical and safety components are not. These include headlamps, tail lamps, ADAS sensors, airbags, and windshields – items that are both costly and commonly replaced in collisions.

That distinction is crucial.

“Headlamps and windshields alone are among the most frequently replaced components, and many are imported from countries outside North America,” he said. “These price hikes will hit hard.”

Core strategies to manage tariff disruption

Mandell outlined three core strategies to manage tariff-driven disruption:

1. Supply Chain Transparency: Insurers and shops should assess their vendors’ sourcing practices to find tariff-exempt pathways.

2. Repair Over Replace: Investing in technologies and skills that allow more parts to be repaired, rather than replaced, could contain costs and improve cycle times.

3. Recycled Parts Utilization: Sourcing recycled components from domestic salvage yards offers a tariff-free alternative – though rising demand could increase their prices over time.

Mandell emphasized that impacts on part pricing and total loss data will lag, likely emerging more clearly by July or August. The just-in-time manufacturing strategy of OEMs could result in earlier parts disruptions, while new vehicle inventories may take longer to reflect pricing changes.

There’s also a question of consumer response. As premiums rise – potentially within 12 to 18 months, pending regulatory approval – drivers may opt for higher deductibles or drop coverages altogether, making them less likely to file claims for minor damage.
“This isn’t a temporary blip,” Mandell concluded. “This is a structural shift in how the collision industry and the broader automotive ecosystem will operate.”

With the intersection of global trade policy and domestic repair planning now front and center, the only certainty is that navigating the road ahead will require both strategy and adaptability.

Yet, the constant back-and-forth – one day tariffs, next a temporary truce, next back on – creates uncertainty that’s exhausting.

“People are second-guessing big purchases [like autos], delaying homeownership, and even dipping into retirement accounts just in case,” said Ali Zane, a credit consultant at iMax Credit, a credit repair firm in Los Angeles. “That uncertainty directly affects how they build credit or plan long-term. What’s been damaged isn’t just portfolios – it’s belief in stability. And that’s harder to fix than a credit score.”