Trump Blamed Immigrants For Auto Insurance Spikes. Experts Say He’s Wrong.

We’ve watched prices soar on everything from eggs to automobiles over the last few years. But few things have kept pace with auto insurance, premiums surging 64% from 2020 to 2025, according to the Bureau of Labor Statistics. The question is why?

President Donald Trump, not surprisingly, has weighed in and he’s pointing his finger at a familiar culprit: “illegal immigrants.” But while they may play a minor role, experts put the blame on a variety of other factors, starting with the pandemic that triggered a rash of risky behaviors by U.S. motorists, in general.

A Familiar Scapegoat

Inflation is again accelerating and that’s putting particular pressure on motorists who’ve seen insurance premiums accelerate far faster than the overall cost of living since the beginning of the decade. Last week, Trump spoke out about that in a post on Truth Social.  “Car Insurance Premiums rose to RECORD HIGHS, forcing Law-abiding American Citizens to subsidize the ‘free riding’ Biden Illegals,” he wrote. “After over a year of ZERO ILLEGAL IMMIGRATION, and our highly successful efforts to REVERSE the Biden Invasion, Car Insurance Premiums have come tumbling down.”

Experts say the president was dead wrong on his first claim, and only partially right on the second. “This claim is pure fiction,” Michael Clemens, a professor of economics at Johns Hopkins University and a senior fellow at the Peterson Institute for International Economics, when it comes to illegal immigrants driving up insurance costs. “It does not arise from any study by the White House, by the auto insurance industry, or even by anti-immigration pressure groups. It has no basis in anything but inflammatory statements that juxtapose two unrelated trends.”

Trump based his claim on a report by the Council of Economic Advisers using data from the Bureau of Labor Statistics. But critics say he seriously misinterpreted the results. That’s not to say illegal immigrants – who often can’t get a driver’s license or insurance – haven’t play a small role. Clemens said that this would have resulted in auto insurance premiums going up just 0.7% during the Biden administration.

What’s Really to Blame?

That’s a small contribution to the average 64% rates went up across the U.S. from 2020 to 2025, according to the Bureau of Labor Statistics. (The figure varied widely from state to state and even in specific cities. The typical American motorist now pays $2,250 to $2,350 annually, but premiums have topped $5,000 in places like Detroit, Las Vegas and New Orleans.)

Crime – car theft, in particular – has long been a factor in such differences. But the surge in insurance overall has largely been the result of the pandemic seen the beginning of this decade. Initially, government-ordered lockdowns led to a sharp decline in traffic, millions of U.S. motorists no longer commuting under work-at-home policies. That soon led to a surge in speeding and other risky behaviors. The California Highway Patrol, for example, reported a record number of fines and arrests in 2020 and 2021 for motorists exceeding 100 mph.

Another factor: a pandemic-related shortage of spare and replacement parts, everything from sheet metal panels to microprocessors. The semiconductor shortage was so severe that it caused major automakers like General Motors and Toyota to shave millions of vehicles off production schedules. And, lower on the totem pole, repair shops often were forced to delay work following an accident while waiting for parts – which were often more expensive because of the laws of supply-and-demand.

The Good News - Well, Not Entirely

If the administration is right on one subject, it’s there’s been a “lowering (of) car insurance premiums” over the last 18 months or so. And at least some of that has been the result of rising pressure on insurers – though typically at the state level where premiums normally are regulated.

Some insurance companies actively have begun taking steps to reduce costs. State Farm, for one, claimed an average rate reduction for its customers of 10% last year. And there are signs that rates are experiencing “negative growth” in 2026, according to the AP. “Average auto insurance premiums have begun to stabilize, and….we are seeing average rate decreases being implemented across numerous states, as well as dividends being paid to policyholders by major auto insurers such as State Farm and USAA,” Mark Friedlander, a spokesperson for the Insurance Information Institute, a leading industry association, told the wire service.

Whether the downward trend will continue is uncertain. Overall inflation can’t be ignored by insurers, not when the average transaction price of new vehicles has topped $50,000, according to Cox Automotive. But the Trump administration is also driving costs up. While parts shortages have largely disappeared, there’s the president’s tariffs on imported aluminum, steel and auto parts. A sizable chunk of automotive repairs rely on imports and that could result in as much as $200 per year in higher insurance costs for those carrying comprehensive coverage, website Insurify estimated.