Navigating Uncharted Terrain: How New Tariffs are Reshaping the Automotive Protection Market

Exploring the way tariffs are reshaping the automotive protection market and vehicle service contracts

As global trade tensions persist, the potential impacts of the United States implementing new tariffs on imported vehicles, parts, and raw materials could ripple through the automotive value chain. The United Kingdom reached an agreement for a 10% flat tariff on its first 100,000 exported vehicles, with a 25% tariff applying on exports above that number. Barring an extension or last-minute deals, other nations with automotive exports to the U.S. will see reciprocal tariffs. This is creating uncertainty across the automotive industry, with far-reaching implications for dealerships and consumers.

From rising repair costs and supply chain disruptions to shifts in consumer purchasing behavior, the industry is bracing for change. For third-party administrators, dealerships, and consumers alike, navigating this uncharted terrain will require not only agility but also the right partners and tools.

At Fortegra, we believe that navigating financial uncertainty is not just about adapting—it’s about staying ahead. As a leading underwriter of F&I products, we’re helping partners assess emerging risks and recalibrate strategies to safeguard long-term value.

What Tariffs Mean for the VSC Market

 Industry analysts agree that tariffs are likely to increase the overall cost of ownership, which will drive more consumers to seek financial protection from unexpected vehicle repairs. Here are some potential trends we’re watching.

• Higher claim costs: Tariffs on imported parts and raw materials—particularly steel and aluminum—are already inflating the cost of common repairs, USA Today reported. As part prices climb, so too will the average claim amount under most VSC programs. For administrators and dealers, this may prompt a reassessment of risk pools and reserves.
• Vehicle-specific pricing models: The disparity between domestic and imported parts may necessitate more granular pricing strategies. Fortegra anticipates a shift in service contract class guides that reflect the origin and complexity of sourcing replacement components.
• Extended vehicle ownership cycles: Higher new vehicle prices are encouraging consumers to hold on to their vehicles longer, with the average age at an all-time high in 2024, according to CNBC. The channel reported that 70% of automobiles in the U.S. are 6 years old or older. This trend increases the likelihood of mechanical issues—especially as warranties expire—making service contracts a critical offering for both consumers and the dealers who serve them.
• Supply chain delays and parts shortages: Beyond cost, availability is an increasing concern. Delays in sourcing foreign-made parts could extend repair timelines and erode customer satisfaction. VSC providers that offer repair flexibility and strong repair network partnerships will be better positioned to mitigate frustration and preserve loyalty.

How Fortegra Is Helping Partners Stay Resilient

 As a program underwriter and longstanding partner to TPAs and dealerships, Fortegra brings deep underwriting expertise, customizable programs, and data-driven decisioning to the table. Here are ways we’re helping our partners stay resilient in this shifting landscape.

• Flexible product design: We’re working with TPAs and dealers to adjust coverage terms and pricing models—enabling our partners to maintain affordability for consumers without sacrificing protection.
• Risk modeling and predictive analytics: Our proprietary analytics capabilities allow us to anticipate shifting cost structures and adjust our programs accordingly. This means smarter reserves, optimized pricing, and enhanced profitability for our partners.
• Consumer-first mindset: At the end of the day, the VSC market is about trust. We collaborate with our partners deliver value and peace of mind to their customers, with tailored VSC offerings that meet the moment.

Looking Ahead

While tariffs and trade policy are largely beyond the industry’s control, preparation and strategic partnerships are not. For TPAs, dealerships, and customers navigating this evolving environment, service contracts aren’t just a nice-to-have—they’re an essential safeguard. Fortegra is committed to helping our partners lead with confidence—offering the protection, insight, and support needed to thrive in a more complex and costly automotive ecosystem.