Reviewed by Daniel Mirkovic
Updated April 17, 2025 | Published April 17, 2025
By now, pretty much everyone is familiar with tariffs. Like every other industry, the insurance sector faces serious impacts from the United States’ tariffs on Canadian goods and the resulting trade war. While it may take some time to determine exactly what those impacts look like, they’re not likely to be good.
But how will tariffs and trade wars affect your home and car insurance? Let’s take a look.
By now, pretty much everyone is familiar with tariffs. Like every other industry, the insurance sector faces serious impacts from the United States’ tariffs on Canadian goods and the resulting trade war. While it may take some time to determine exactly what those impacts look like, they’re not likely to be good.
But how will tariffs and trade wars affect your home and car insurance? Let’s take a look.
Tariffs are essentially taxes that one country places on goods imported from another country.
Theoretically, that means that tariffs only affect prices in the country that establishes them. For example, the US’s tariffs only apply to goods entering the US; they don’t directly affect goods within Canada or those entering the country.
In practice, however, the US’s tariffs have led many countries (including Canada) to set their own tariffs on goods coming from the US. Since Canada imports nearly $500 billion worth of goods from the US annually, there’s no escaping the impact.1 While Canada’s retaliatory tariffs only apply to specific goods, Canadians have seen and will see rising prices in many places — including insurance.
Put most simply, when the price of everything goes up, the price of insurance has to follow. Home and car insurance are primarily meant to insure physical objects (cars, houses, personal property, etc.). When the cost of repairing or replacing things increases, insurance premiums have to increase alongside.
Home insurance covers your house, and most of the moveable stuff inside it. This broad scope means that many different tariffs will likely impact home insurance costs.
Car insurance, as far as material goods go, is pretty much limited to covering vehicles. Unfortunately, vehicles find themselves right in the middle of the trade war. Car insurance is expected to be the hardest hit by tariffs.4
As of April 9, 2025, Canada has imposed a 25% tariff on vehicles that aren’t compliant with the Canada-United States-Mexico (CUSMA) trade agreement. It also applies to the US-sourced portion of a vehicle that is compliant. This tariff applies only to assembled vehicles, not auto parts. Approximately 10% of vehicles imported from the US are not CUSMA compliant.5 The tariffs on steel, aluminum, and other metals will also impact the purchase cost of new vehicles. Altogether, the purchase price of new vehicles will likely increase by anywhere from $3,000 to $12,000.6
Higher replacement costs for vehicles will have an impact on car insurance premiums. Car insurance providers will see their claim settlement costs rise and increase rates to cover those costs. There may also be supply chain disruptions, which could increase the cost and timeframe of repairs.
Given the scope of the tariffs and potential supply chain disruptions, some price increases may be difficult to avoid for anyone. However, there are a few things that insurance providers are doing in response.
Mainly, that would involve seeking non-US alternatives throughout their supply chain. Whether auto parts for vehicle repairs or building materials for home repairs, there are opportunities to replace US-based suppliers with Canadian (or at least non-American) alternates.
There isn’t a lot that insurance customers can do to address the root cause of trade-related premium increases. But, there are options for reducing one’s premiums regardless of the reason for any increase.
Check out these resources for more tips on lowering your insurance premiums:
Sources
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About the expert: Daniel Mirkovic
A co-founder of Square One with 25 years of experience in the insurance industry, Daniel was previously vice president of the insurance and travel divisions at the British Columbia Automobile Association. Daniel has a bachelor of commerce and a Master of Business Administration (MBA) from the Sauder School of Business at the University of British Columbia. He holds a Canadian Accredited Insurance Broker (CAIB) designation and a general insurance license level 3 in BC, Alberta, Saskatchewan, Manitoba and Ontario.
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