U.S. tariffs may raise cost of insurance, parts, drive up auto thefts
18/07/2018 21:59
By David Shepardson
WASHINGTON, July 17 (Reuters) - A threat by the U.S.
government to impose tariffs of up to 25 percent on imported
auto parts could hit consumers in unexpected ways: higher repair
costs, insurance premiums and even the theft of more cars for
their parts, the industry said.
U.S. President Donald Trump's administration has launched an
investigation into whether auto imports pose a national security
threat and threatened to slap the tariffs on cars from the
European Union and elsewhere.
A coalition of auto insurance groups said in previously
unreported comments that hiking tariffs on imported auto parts
by 25 percent could increase costs by 2.7 percent, or $3.4
billion annually, for personal auto insurance premiums.
The U.S. Commerce Department will hold a hearing about the
matter on Thursday.
Consumers will bear virtually all the higher repair costs,
said the American Insurance Association, National Association of
Mutual Insurance Companies and Property Casualty Insurers
Association of America in comments jointly submitted to the
Commerce Department.
"The imposition of tariffs could likely lead to the filing
of hundreds, if not thousands, of requests for rate increases by
insurers with insurance regulators across all fifty states," the
groups said.
Insurers said they might not be able to quickly get
replacement parts for policyholders, "resulting in delays and
increased costs."
"Motor vehicle theft rates could well rise, as many stolen
vehicles are sold for their parts," the groups added.
A Commerce Department spokesman did not comment Wednesday on
the industry statements, but said the agency would send a report
to the White House after "collecting all the facts, and
completing a careful analysis."
"While we aim to complete the investigation and report to
the President within a couple months, no proposal for action has
yet been made," the department said.
In separate comments to the Commerce Department, the Auto
Care Association, which represents 150,000 manufacturers,
distributors and sellers of motor vehicle parts and related
goods, that its economic study estimated that the cost of car
ownership would increase by more than $700 per year per
household should the tariffs be imposed.
Top executives of Michelin North America, Cooper Tire &
Rubber CTB.N , Sumitomo Rubber Industries 5110.T said in a
joint letter to the Commerce Department that rising costs for
auto parts makes consumers "wait longer before making a new car
purchase or maintaining the safety of their vehicle."
"We are concerned that consumers waiting longer to replace
their tires will result in increased traffic accidents and
fatalities," they said.
Kristin Dziczek, an economist at the Center for Automotive
Research, said the tariffs will boost maintenance costs, since
many parts regularly used for vehicles largely made overseas
like air filters and water pumps.
"The costs of maintaining a car is going to go up as is
fixing or insuring it," Dziczek said. "But those costs are not
going to go up as much as buying a new car" with added tariff
costs.
Separately, a coalition of seven auto industry trade groups
representing nearly every major automaker, auto dealers and
parts companies said in a letter to Trump on Tuesday that the
tariffs will be a "massive tax" on consumers, leading to
"increasing vehicle service and repair costs that may result in
consumers delaying critical vehicle maintenance."
(Reporting by David Shepardson; Editing by Richard Chang)
((David.Shepardson@thomsonreuters.com; 2028988324;))