Tariff turmoil: Alberta drivers slammed by soaring insurance costs tied to U.S. trade war

The impact tariffs have on Alberta drivers

While the threatened U.S. tariffs were only partially implemented, it didn't stop the auto industry from updating and changing their production patterns and supply chains. As a result, the tariffs — real or threatened — have raised insurance premiums for Alberta drivers, in some cases as much as 5%.

For a driver paying $2,500 a year in auto insurance, this means the tariffs tacked on an additional $125 per year.

The impact tariffs have on Alberta's auto industry

Several areas in the auto sector have been negatively affected by U.S. tariffs, and this has led to an increase in the cost of vehicle repairs and replacements and a strain on supply chains. As a result, the negative effects of tariffs include:

• An increase in the cost of new vehicles and auto parts, due to the 50% U.S. tariffs on Canadian steel and aluminum which went into effect June 3, 2025 (after the initial 25% tariff was introduced on March 12, 2025).
• Cost of imported vehicles increased by a third, after Canada launched a 25% counter-tariff on non-CUSMA-compliant vehicles imported from the United States.
• A loss of jobs and future wage growth as auto manufacturers pause, cancel or close the expansion of their Canadian operations, placing further strain on vehicle repair and replacement supply chains and adding additional cost pressures.

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Alberta’s rate cap issues

Even without contemplating the impact of tariffs, Alberta drivers were already facing premium price increases based on a loss trend report released by the Alberta government's Auto Insurance Rate Board (AIRB). Loss trends are used by insurers in new rate filings — how insurance companies determine how large or small of a premium a driver must pay to insure a specific vehicle.

"The current 'good driver' rate cap does not reflect these new cost pressures. Unless insurers are able to account for the impact of tariffs and other growing costs in their rates, they may be forced to further reduce the availability of coverage for drivers to remain financially viable," explains Sutherland.

Based on the AIRB loss report , many vehicle premiums are in excess of the current rate cap and the this will be exacerbated over the next year as costs are predicted to rise. For instance, the AIRB report shows:

• Bodily injury (legal) costs will grow an average of 9.1%
• Accident benefits (medical/rehab/income replacement) costs will grow an average of 5.5%
• The cost of vehicle damage claims will grow by approximately 10%

"New cost pressures created by the trade dispute with the United States are piling on top of other cost pressures in the auto insurance system and creating new challenges for insurers who are paying out more money in claims than they take in through premiums," said Sutherland. The result is that individual drivers will end up with higher auto insurance costs — a cost that won't decrease until the global economy finds more stability in supply chains and more sanity in trade relations.

— with files from Romana King