The Fallout of The Tariff Wave on Auto Parts

The full impact of the tariff increases on auto parts is still not completely clear, but we are starting to see the impact—and we can put some numbers to it all.

To track the inflationary trends over time and compare the market behavior of the various part types—new original equipment manufacturer, aftermarket, recycled/used and remanufactured/reconditioned—I mirrored the logic behind the Consumer Price Index market basket approach to measuring inflation.

I wanted to focus on a set group of parts, where the individual part existed in each category, so, for example, that I was not comparing an OEM trim piece to an aftermarket hood. With that in mind, I created a parts market basket report to track inflationary trends across a consistent set of components: fenders, hoods, bumper parts, lamps and wheels.

This has been a very valuable macro trend tracker for inflation and has pointed out that, since the introduction of the auto parts tariffs, retail prices for OEM and remanufactured parts have started to rise, while aftermarket parts have not yet seen a similar increase.

Roughly 44% of OEM parts used in collision repair are produced outside the United States, and many of these non– United States-Mexico-Canada Agreement-compliant parts are now subject to tariffs. As a result, OEM retail prices rose 2.1% from Q1 to Q2 2025, compared to a 1% increase during the same period in 2024. We have not seen the increase in parts pricing for aftermarket or recycled parts as of yet.

It’s worth explaining a bit about the tariffs and the current legal challenges many of the tariffs face.

While many of the tariffs were imposed by the administration based on the President’s declaration of an economic emergency, the imported auto and auto parts tariffs are not.

The 25% tariff on imported autos and parts was levied based on Section 232 of the 1962 Trade Act. That means they will stay in place as long as the administration sees fit and have not been part of the various lawsuits, court decisions and appeals. Steel and aluminum tariffs (80% of automotive-grade aluminum is mined in Canada) are now subject to a 50% tariff, and the justification for imposing these tariffs was based on both the economic emergency declaration and Section 232 of the Trade Act. That makes it all the more critical to evaluate the impact of the tariffs and when we will begin to see those impacts.

So, in addition to the Parts Price Inflation Index, I created a “20/20” report, where I look at the list prices of the top 20 major parts on the 20 most popular vehicles in collision repairs.

Looking at this data on a weekly basis, we can pinpoint when and if inflationary pressures will impact these high-volume parts. Choosing the highest-volume parts is critical, as they are the first to have their stock replenished and will see the inflation pressure sooner. So far, we are seeing the same trend, with OEM new parts beginning to show some inflation impact at a higher rate than the same period last year, but with aftermarket parts prices remaining flat compared to the same period in 2024.

What will be the impact on collision repair costs?

The American Property Casualty Insurance Association estimates that a 25% tariff on imported repair parts, all other factors remaining static, could increase auto repair claims costs by 2.7%.

This increase could subsequently be passed on to consumers in the form of an additional $3.4 billion in personal auto insurance premiums alone. Using the parts pricing data in PartsTrader, and assuming the current number of replaced parts is 13.5 parts per estimate, and the current makeup of OEM and aftermarket parts and how they vary by vehicle country of origin, we came up with the potential impact being between $80–$100 per repairable claim.

There are several caveats to this number. With increased new vehicle prices because of the import tariffs and parts tariffs, we will likely see a spike in used vehicle prices, and therefore a higher total loss threshold, resulting in more repairable cars with more parts replaced.

I believe we will see an increase to potentially 15 parts per repairable claim, increasing the impact by $9 to $11. The administration has also frequently asked retailers to “eat the increases,” and to an unknown extent, parts distributors may do the same or partially absorb the increases to stay competitive.

We don’t yet know the full impact of the tariff increases, but we are starting to see them and have built a tracking mechanism to identify when they do.

Horn is the chief industry relations officer at PartsTrader. He began his auto claims career at Safeco and later held senior leadership positions at The Hartford, GMAC Insurance, National Grange Mutual and Leader National Transport Insurance Companies. He was also vice president of industry relations and data analytics for Mitchell International.

Top photo: Vehicles for export are parked at a port in Pyeongtaek, South Korea, Tuesday, April 15, 2025. (AP Photo/Lee Jin-man).

The Fallout of The Tariff Wave on Auto Parts

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