A prospective US-Canada trade deal could ease cost pressure on auto and property insurers, with US tariffs on Canadian-made vehicles potentially falling from 25% to 15% and duties on steel and aluminum from 50% to 25%.
The potential reductions are significant for insurers because vehicles, parts and construction materials are key drivers of claims costs. 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. Personal auto accounted for nearly one-third of US property and casualty premium volume, the trade group said.
Lower tariffs could ease some of that pressure, but they would not necessarily reverse changes businesses have already made to supply chains, sourcing and inventories.
The estimate reflected the tariff structure in place at the time and should not be read as a forecast of how much a Canada deal would save insurers. It does, however, illustrate why changes to vehicle and parts tariffs matter for underwriting and claims.
Insurance Business has previously examined the impact of tariffs on insurance claims, including higher prices for imported vehicle parts and other materials as well as supply-chain delays that can increase repair costs and extend claim durations. In commercial property losses, longer waits for materials can also increase business interruption costs alongside the physical damage claim.
Property replacement costs are already showing some moderation. The latest Verisk reconstruction-cost analysis found that total US reconstruction costs, including materials and retail labor, increased 3.6% between April 2025 and April 2026, down from 5.2% in the previous 12-month period.
A reduction in steel and aluminum tariffs could remove another source of upward pressure, but it would not eliminate other drivers such as labor costs, catastrophe demand and prices for materials outside the agreement. For brokers, that makes a tariff deal a reason to reassess valuations rather than automatically reduce them.
The more persistent issue may be supply chains. Insurance Business reported this week on tariff-driven shifts in client exposures, including changes to suppliers, inventory strategies and sourcing arrangements that can alter business interruption and contingent business interruption exposures even if tariffs are later reduced.
“One thing businesses need to consider is whether supply-chain shifts have changed material lead times. That could significantly extend the business income period of restoration after a loss,” nationwide mid-market commercial lines leader Kristina Talkowski told Insurance Business.
The trend extends beyond individual accounts. The Allianz Risk Barometer 2026 found that 49% of respondents were renegotiating or diversifying supply chains in response to changing trade and investment patterns, including tariffs, while just 3% described their supply chains as “very resilient.”
Those shifts can materially change the risk profile at renewal. A manufacturer may now rely on different suppliers or production locations, a contractor may be sourcing materials from markets with longer lead times, and a company carrying less inventory may have less ability to absorb an interruption. Changes in supplier concentration can also alter contingent business interruption exposure.
That means the assumptions underlying an insurance program may no longer match how the business operates. Property values may have changed, restoration periods may need to be reassessed, supplier dependencies may be different, and higher costs absorbed during the dispute may also affect decisions around deductibles and self-insured retentions.
A US-Canada agreement could ease some prospective claims-cost pressure, particularly in auto and property. But lower tariffs would not necessarily return exposures to where they were before the dispute, with some clients entering renewal with different supply chains, cost structures and recovery timelines.
