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The Tipping Point: When Owning a Car Becomes a Luxury

The cost of owning a car in the U.S. is about to climb significantly—and fast. Thanks to former President Donald Trump’s proposed 25% tariffs on all imported vehicles, the price of even the most affordable cars could rise by $2,500 to $5,000, with premium imported models jumping by as much as $20,000, according to the Anderson Economic Group. That’s an average hike of 13.5% across the board, the Yale Budget Lab reports.

And this isn’t just a one-time bump. With inflation and interest rates already impacting the cost of car ownership, the tariffs could push many Americans—especially first-time buyers and low-income families—toward a financially impossible choice.

According to the Bureau of Transportation Statistics, transportation costs are already the second-largest household expense after housing, soaking up about 15% of the average household budget. For lower-income Americans, it’s even worse—some spend nearly 30% of their income just getting around.

Meanwhile, auto loan delinquencies have hit a 30-year high, per Fitch Ratings, signaling that many are already financially overextended.

Public Transit: A Forgotten Lifeline Gets a Second Look

As the car market veers into luxury territory, public transportation advocates are calling this a critical moment to reshape America’s travel habits.

“There’s a real opportunity for public transit to become a smart, cost-effective alternative,” says Paul Skoutelas, CEO of the American Public Transportation Association (APTA). His organization estimates that individuals who switch from driving to using public transportation can save over $13,000 a year—money that can go toward housing, food, or retirement savings.

But it’s not just about saving money. Public transit is also significantly better for the planet. The EPA reports that the transportation sector contributed over 28% of total U.S. greenhouse gas emissions in 2022. Buses and trains can cut emissions by up to 67% per passenger compared to private cars, making the shift not only economically wise but environmentally responsible.

History Repeats: Economic Shocks Have Always Boosted Transit—Temporarily

If this sounds familiar, it’s because similar patterns have emerged throughout American history:

• World War II: Civilian car production stopped. Americans flooded to buses and trains.
• 1970s Energy Crisis: Gas shortages led to spikes in carpooling and transit ridership.
• 2022 Ukraine Crisis: Gas prices surged. Transit use increased 3% in NYC, 4% in D.C., and 7% in San Francisco—in a single week.

Every time, ridership surged. And every time, it faded as soon as cars became accessible again. Why? Because U.S. infrastructure overwhelmingly favors roadways.

As of 2024, 87% of all daily trips in the U.S. still happen in private vehicles, according to the Department of Transportation. The infrastructure simply doesn’t support robust transit usage—yet.

Investment Lag: America’s Neglect of Public Transit

Despite its potential, public transit is chronically underfunded.

• 80% of the federal gas tax goes to roads.
• Just 20% supports public transit initiatives.
• Around two-thirds of transit funding comes from local and state governments, with limited federal backing.

The Trump-era Department of Transportation often blocked or delayed major transit projects, including revoking New York City’s congestion pricing plan and reevaluating California’s high-speed rail initiative. Transportation Secretary Sean Duffy even stated funding would prioritize communities with “higher marriage and birth rates”, which experts say disadvantages urban populations that rely heavily on mass transit.

Ballot Measures and Public Demand: The People Want More Transit

While federal support has wavered, Americans themselves are increasingly voting to fund transit.

In 2024, voters approved 46 of 53 transit-related ballot measures, unlocking $25 billion in funding for initiatives like:

• Bus fleet electrification
• Extended service hours
• Subsidized fares for low-income riders
• Infrastructure upgrades

And more are on the way. Cities like San Francisco and Charlotte are already preparing new ballot measures to expand their systems further.

“If there’s ever been a time to reinvest in transit, this is it,” said Midori Valdivia, transit expert and board member of the New York Metropolitan Transportation Authority.

Reality Check: Transit Needs More Than Riders—It Needs Reliability

It’s important to recognize that rising car costs won’t magically increase transit ridership—especially in cities where buses and trains are unreliable, infrequent, or nonexistent.

Even now, ridership is still at just 85% of pre-pandemic levels, and many transit agencies face serious budget shortfalls. Cities like Chicago are staring down possible service cuts, layoffs, and fare hikes.

“Public transit must be a reliable and convenient alternative,” says Valdivia. “But right now, in most American cities, it’s not.”

Final Takeaway: Tariffs Could Hurt, or They Could Help Us Rethink Mobility

Trump’s proposed tariffs might create financial strain, but they could also kickstart a much-needed transformation in how America moves. If paired with serious infrastructure investment and public demand, this moment could usher in a new era for public transportation—one that’s cleaner, cheaper, and more equitable.

But if the government continues to underfund transit while making car ownership more expensive, it may simply leave many Americans stranded—with fewer options and higher bills.

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