There are two issues here
You're using variables which can only contain single values while INSERTED is actually a set of zero, one or more records and you want to insert a rental rate for each of them
And to make matters worse you're assigning query text to them as opposed to query results
SET @CustomerID ='SELECT CONVERT(INT, CustomerID) FROM INSERTED'
instead of
SET @CustomerID =(SELECT CONVERT(INT, CustomerID) FROM INSERTED)
Which is why you're getting the error you see. You're attempting to set the value of @customerID to the 45 character long string 'SELECT CONVERT(INT, CustomerID) FROM INSERTED'
Sorting that and the other variables out might work, if you only add one record at a time, but really you should lose the variables entirely.
Your INSERT statement should be something like this
INSERT INTO RentalRates(CustomerId,Daily,Monthly,Weekly)
CONVERT(INT, i.CustomerID),
cast(r.daily as smallmoney),
cast(r.weekly as smallmoney) ,
cast(r.mountly as smallmoney)
FROM INSERTED i
JOIN Rates r ON r.id = 1