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US-Canada tariff cuts could ease cost pressure for auto and property insurers
A prospective deal would reduce tariffs on Canadian vehicles and on steel and aluminum, which are key inputs into insured auto and construction loss costs.
Insurance Business reports that a potential US-Canada trade deal could lower cost pressure for auto and property insurers by reducing tariffs tied to vehicles, parts, and construction materials. The report cites prospective tariff cuts that would move US duties on Canadian-made vehicles from 25% to 15%, and reduce tariffs on steel and aluminum from 50% to 25%.
The outlet says tariff reductions matter because vehicles, parts, and building materials are major drivers of claims costs, including repair expenses and, for commercial property, business interruption losses. In spring 2025, the American Property Casualty Insurance Association estimated that tariffs then in place could add roughly $30 billion to $61 billion to personal auto claim costs over a 12-month period, and personal auto represented nearly one-third of US property and casualty premium volume.
Insurance Business adds that lower tariffs may ease some upward pressure, but they may not unwind changes companies made during the dispute. It points to tariff-driven shifts in supply chains, such as sourcing and inventory decisions, that can affect business interruption and contingent business interruption exposures even after duties fall.
The report also notes that replacement cost inflation is moderating, citing Verisk analysis showing total US reconstruction costs rose 3.6% between April 2025 and April 2026, down from 5.2% in the prior 12-month period. Still, it argues that other drivers such as labor costs, catastrophe demand, and material prices outside the agreement would likely continue to influence losses, prompting brokers to reassess valuations rather than assume immediate relief.