The Trump administration’s tariff policies may raise auto insurance premiums for motorists, according to a new Insurify analysis. This at a time when drivers continue to see costs soar amid pandemic-era inflation.

A 25% tariff on imports from Canada and Mexico — which may take effect as soon as March — would increase annual full-coverage car insurance premiums by 8% to $2,502, on average, by the end of 2025, according to Insurify.

It estimates average annual premiums would rise 5% by year-end, to $2,435, without tariffs on Canada and Mexico.

Tariffs are expected to make cars and auto parts imported from Canada and Mexico — which are major suppliers for the U.S. market — more expensive. As a result, insurers pay out more money in claims when policyholders get into car accidents, and they pass on that financial risk to consumers via higher premiums.

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“When people think about tariffs, they typically think about goods they might get from somewhere else,” said Matt Brannon, a data journalist at Insurify who authored the analysis. “Many times, we don’t think about services like car insurance.”

He called the estimates of tariff impact “conservative.”

Trump imposed a 10% additional tariff on all imports from China, starting on Feb. 4. Across-the-board tariffs on Canada and Mexico were also set to take effect that day, before the White House delayed them by a month.

About six out of every 10 auto replacement parts used in U.S. auto shop repairs are imported from Mexico, Canada and China, according to the American Property Casualty Insurance Association. Some car components cross the border multiple times before final assembly.

Trump also signed a sweeping plan for retaliatory tariffs on global trading partners, after a review set to be completed by early April. He signed an order to raise duties on aluminum and steel to 25%, up from 10%, and called for a 25% tariff on automobiles, pharmaceuticals and semiconductors.

Economists don’t necessarily expect all tariffs to take effect. Trump may be wielding them as a tool to extract concessions from trading partners, they said.

“However, using tariffs as a negotiation tool doesn’t mean no imposition of tariffs,” Bank of America Securities economists wrote Friday in a research note. Those experts don’t anticipate Canada or Mexico tariffs will come to pass.

However, if they do, they’d likely exacerbate already soaring premiums for cars, parts and insurance premiums, experts said.

“Threats of 25% tariffs on the North American borders — proposed, now delayed — would disrupt more than three decades of free trade across North America and rattle every corner of the automobile business, while proposed ‘reciprocal’ tariffs would add further price pressure to an auto industry already facing affordability issues,” Cox Automotive wrote in a recent commentary.

Motor vehicle insurance premiums are up by 12% in the past year, according to the consumer price index.

Insurance costs began to rise quickly in 2022 and 2023 as Americans worked from home less often and commuted to work more frequently, Brannon said.

“A lot more people hit the road at the same time, which led to more accidents,” he said.

The Trump administration’s purge of federal workers may ultimately amount to the biggest job cut in U.S. history, which is likely to have ramifications for the economy, especially at the local level, according to economists.

The White House, with the help of Elon Musk’s so-called Department of Government Efficiency, has fired or offered buyouts to workers across the federal government, the nation’s largest employer.

While the precise scale of the job cuts is as yet unclear, evidence suggests it’s at least in the tens of thousands so far, economists said.

The Trump administration directed federal agencies to dismiss “probationary” employees. Probationary workers are more-recent hires who have been with the federal government for only a year or two and who do not yet have full civil service protections.

There were about 220,000 federal employees with less than a year of tenure as of May 2024, according to the most recent data from the U.S. Office of Personnel Management.

Additionally, more than 75,000 federal workers have accepted a buyout offer, according to a Trump administration official. They agreed to resign but get paid through September.

The total of these two groups — nearly 300,000 workers — would make these actions amount to the “largest job cut in American history (by a mile),” Callie Cox, chief market strategist at Ritholtz Wealth Management, wrote Tuesday.

That sum doesn’t include others who may be on the chopping block, such as contractors who work at the U.S. Agency for International Development. Career civil servants who got promotions in the past year are also at risk of losing their jobs, since they’re technically on probation in their new role, Jesse Rothstein, a public policy and economics professor at University of California, Berkeley, said in a podcast Thursday.

Job cuts have come from across the government, at agencies including the Internal Revenue Service, National Park Service, Consumer Financial Protection Bureau, and the departments of Agriculture, Education, Energy, Health and Human Services, Homeland Security, and Veterans Affairs, according to the Associated Press.

“We may soon find out the hard way that people drive the U.S. economy,” Cox wrote.

For example, there may be some crossover: Probationary workers who would have been fired may have accepted a buyout. Also, in some cases, the Trump administration tried hiring back workers who’d been terminated.

Public disclosures show more than 26,000 federal workers have already been fired, excluding buyouts, according to a research note Wednesday from investment bank Piper Sandler.

That’s about the same number of workers who lost their jobs when Lehman Brothers collapsed during the 2008 financial crisis, for example.

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But Thomas Ryan, a North America economist at Capital Economics, estimates that between 100,000 and 200,000 federal staffers have probably already been let go.

That would handily beat IBM’s 1993 purge of 60,000 workers, thought to be the largest corporate layoff in U.S. history. Among other notable corporate cuts, Citigroup and Sears, Roebuck & Co. each slashed about 50,000 jobs, in 2008 and 1993, respectively.

“Certainly if all 200,000-plus probationary workers are fired [without replacement] that would be historic,” Susan Houseman, senior economist at the nonpartisan W.E. Upjohn Institute for Employment Research, wrote in an e-mail.

Even among prior federal layoffs, the scale of potential cuts appears unprecedented, experts said.

The U.S. Army, for example, eliminated 50,000 jobs in September 2011 as former President Barack Obama withdrew troops from Afghanistan and Iraq, according to outplacement firm Challenger, Gray & Christmas. The U.S. Air Force announced plans in 2005 to reduce head count by 40,000, the firm said.

The Bureau of Labor Statistics tracked data on federal mass layoffs from 1995 to 2003. During that period, mass layoffs affected anywhere from roughly 9,000 federal workers per year to 23,000 a year, the data show.

If the current federal job cuts “are not historic yet, it feels like we’re headed in that direction pretty quickly,” said Mark Zandi, chief economist at Moody’s.

The White House didn’t comment on the specific scale of cuts.  

“President Trump and his administration are delivering on the American people’s mandate to eliminate wasteful spending and make federal agencies more efficient, which includes removing probationary employees who are not mission critical,” Anna Kelly, a White House spokesperson, said in a written statement. “This is part of President Trump’s sweeping effort to save taxpayer dollars, cut wasteful spending, and restore our broken economy.”

Affected workers who can’t quickly find new jobs may be forced to make ends meet without regular income. Unemployment benefits may offer a temporary stopgap to eligible workers, but they replace only about a third of prior wages, on average, according to Labor Department data.

The majority of workers who suffer job loss are affected long term, as they have trouble finding new full-time jobs and subsequently earn less money, according to a 2016 research paper by Henry Farber, professor emeritus of economics at Princeton University, who studied data from 1981 to 2015.

“There are economic impacts to [laid-off workers], their families, to the businesses they would have bought goods and services from,” said Erica Groshen, a senior economics advisor at Cornell University and former commissioner of the U.S. Bureau of Labor Statistics.

“The economic consequences of layoffs are like a domino effect that spread across local economies to businesses that seem to have no connection whatsoever to the federal government,” said Ernie Tedeschi, director of economics at the Yale University Budget Lab.

Laid-off workers may spend less at businesses such as local coffee shops, restaurants and day care facilities, he said.

There’s a psychological factor to mass layoffs, too, economists said. Other federal workers, fearful for their jobs, may pull back on spending and delay big-ticket purchases. Businesses with ties to the federal government or the federal workforce may stop hiring and investing due to uncertainty.

Washington, D.C., for example, is expected to suffer a “meaningful” increase in unemployment that would push the capital into a “mild recession,” Adam Kamins and Justin Begley, economists at Moody’s, wrote in a note Tuesday.

Close to 100,000 federal government positions will be eliminated or moved from Washington in the next couple of years, Kamins and Begley estimate. A “flood” of job applicants will limit the private sector’s ability to absorb them into the labor pool, they said.

The economies of Maryland and Virginia won’t suffer to the same degree but will be “materially” hurt due to their exposure to government employment, Kamins and Begley wrote.

Layoffs aren’t likely to show up in federal data for another month, and not until September for those who take the severance deal, according to Piper Sandler. Unemployment claims in Washington, D.C., for the week ended Feb. 8 were up 36% from the prior week.

Student loan borrowers who expected smaller monthly payments under the new Saving on a Valuable Education, or SAVE, plan received some bad news on Feb. 18, when a U.S. appeals court blocked the program.

As a result, millions of people will need to switch to a new repayment plan soon.

The adjustment will likely be challenging, said higher education expert Mark Kantrowitz.

“Borrowers who were in SAVE will have to pay more on their federal student loans, in some cases double or even triple the monthly loan payment,” Kantrowitz said.

The recent appeals court order, in addition to blocking SAVE, also ended student loan forgiveness under other income-driven repayment plans.

Here’s what borrowers need to know.

(Income-driven repayment plans set your monthly bill based on your income and family size, and used to lead to debt forgiveness after a certain period, but the terms vary.)

The 8th U.S. Circuit Court of Appeals on Feb. 18 sided with the seven Republican-led states that filed a lawsuit against the U.S. Department of Education’s repayment plan.

While the legal challenges against SAVE were playing out, the Biden administration put student loan borrowers who had enrolled in the plan into an interest-free forbearance. That plan said the pause on any bill could last until December.

But now, Kantrowitz said, “It will likely end sooner under the Trump administration, within weeks or months.”

Borrowers should start looking now at their other repayment options, experts said.

The recent appeals court order against SAVE also ended student loan forgiveness under many other income-driven repayment plans, including the Revised Pay-As-You-Earn repayment plan, or REPAYE.

Currently, only the Income-Based Repayment Plan, or IBR, leads to debt cancellation.

However, if you’re pursuing Public Service Loan Forgiveness, you should be eligible for debt cancellation after 10 years on any of the IDR plans, said Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit that helps borrowers navigate the repayment of their debt. (PSLF offers debt erasure for certain public servants after 10 years of payments.)

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“It’s also important to point out that all the IDR plans cross-pollinate for forgiveness,” Mayotte said. “If someone has been on PAYE for eight years and now switches to IBR, they will still have eight years under their belt toward IBR forgiveness.”

There are several tools available online to help you determine how much your monthly bill would be under different plans.

Meanwhile, the Standard Repayment Plan is a good option for borrowers who are not seeking or eligible for loan forgiveness and can afford the monthly payments, experts say. Under that plan, payments are fixed and borrowers typically make payments for up to 10 years.

If you’re unemployed when student loan payments resume, you can request an unemployment deferment with your servicer. If you’re dealing with another financial challenge, meanwhile, you may be eligible for an economic hardship deferment.

Other, lesser-known deferments include the graduate fellowship deferment, the military service and post-active duty deferment and the cancer treatment deferment.

Student loan borrowers who don’t qualify for a deferment may request a forbearance.

Under this option, borrowers can keep their loans on hold for as long as three years. However, because interest accrues during the forbearance period, borrowers can be hit with a larger bill when it ends.