Supreme Court overturns tariffs: How will this affect insurance costs?

In a 6 to 3 vote, The Supreme Court has ruled that President Trump's imposition of global tariffs was an illegal use of emergency power. For the insurance industry, the effects will most likely be seen in the areas of property & casualty and auto because of the tariffs' impact on replacement parts, as well as construction supplies such as roofing materials. Insurers had to adjust their reserves for higher replacement costs due to the tariffs, so the expectation is that there will be a drop in reserve costs for some claims.

David Seider, chief commercial officer at TheZebra.com said in a statement to Digital Insurance, "Today's Supreme Court ruling overturning the tariff regime removes a significant source of economic uncertainty for consumers and businesses. Tariffs on imported goods, especially vehicles and auto parts, were already contributing to higher new and used car prices — and that, in turn, was pushing auto insurance premiums upward as insurers anticipated more expensive repairs and claims."

Now that those tariffs have been struck down, we may see some relief in cost pressures downstream. Lower material and vehicle prices could eventually moderate the upward trend we've seen in auto insurance rates. In fact, it may even pave the way for a broader implementation of rate decreases in select parts of the country."Rest assured, carriers will be watching closely to see if tariffs are pursued under separate legal cover. If alternative trade policies or other cost pressures emerge, those factors will ultimately be reflected in premiums."

Late last year, Digital Insurance surveyed the industry on a number of factors expected to affect the insurance industry in 2026, and 52% of respondents expected there to be tariff volatility if they remained in place. 

Chris Desmond, a partner in PwC's Customs and International Trade practice, shared some initial thoughts with Digital Insurance, "Beyond the legal implications, the real challenge now is operational. Companies will need to rapidly model which IEEPA tariffs may be refundable and quantify their opportunity, because any refund process is likely to be highly congested. Customs brokers will be under significant strain, with limited capacity to manage a surge of post-summary corrections and protests across thousands of importers. Those that move quickly, with clear data and a defined strategy, will be far better positioned to get in front of the line as refund mechanisms take shape."  

Companies that took a proactive approach to managing the impacts from the tariffs are likely to be in the best position to adjust more quickly now that they have been removed.

"This ruling once again proves what we advised C-suites around the world to do in March of last year: ensure you have a robust scenario planning discipline in place to prepare for a range of outcomes, one of which being this ruling," said Mark Moccia, VP, Research Director for Technology Executives at Forrester. "Those who heeded this advice were ready for this possibility and will experience lessened impact from the news. This shows up both in the form of immediate impacts to their business and in their readiness for what may come next, which is likely a reformation of the same trade actions tariffs were intended to drive but via other means."

The decision gives companies an opportunity to possibly file for refunds and Desmond offers this advice. "Even where tariff refunds may be available, many companies will face internal capacity constraints. Customs and trade compliance teams are already stretched managing day-to-day filings, enforcement activity, and ongoing tariff changes. Layering a large-scale refund exercise on top—requiring detailed entry reviews, coordination with brokers, and tight procedural deadlines—will be challenging without additional resources or external support. Companies that underestimate this workload risk timing delays to their financials while creating potential compliance issues if they request refunds on the wrong tariff lines."  

Desmond also highlighted three factors that companies should focus on because of the ruling. "For the portion of IEEPA tariffs that may be refunded, companies should focus on three critical considerations. First, robust modeling is essential to understand true opportunity and eligibility at the entry level. Second, CFOs should consider the timing of potential refunds given procedural and capacity constraints. Third, execution risk is real—customs brokers and in-house trade compliance teams are already operating at capacity, and the added volume of refund activity will strain processing timelines. Companies that plan across all three dimensions will be better positioned to recover value." 

In response to today's ruling, President Trump indicated that he has other tools at his disposal to use and announced a 10% global tariff, but this would be limited to 150 days by law.