Car prices will go up. Taking the train or a bus looks like a bargain

CNN

10-04-2025

President Donald Trump's auto tariffs are expected to lift car prices by thousands of dollars. That's an opportunity for America's trains and buses.
Public transit advocates hope soaring car costs will push more people to the US transit system and spur government investment to improve service. Trump's 25% tariffs on all cars shipped to the United States are likely to pile costs on to the already steep financial burdens of driving, and consumers can save thousands of dollars annually by switching to transit.
'We think that there's an opportunity for transit to present itself as a viable option,' said Paul Skoutelas, the CEO of the American Public Transportation Association.
Transportation costs are consumers' second largest expense behind housing, accounting for 15% of average spending, in large part due to the costs of driving and maintaining a car. These costs hit lower-income households the hardest. Lower-income Americans spending roughly 30% of their income on transportation, according to the Bureau of Transportation Statistics. Many Americans are struggling with these costs, and delinquencies on auto loans hit their highest rate in more than 30 years, Fitch Ratings said last month.
Car costs that would rise even higher from tariffs 'give people additional reason to consider a good transit alternative,' Skoutelas said. In 2023, his group calculated that Americans could save more than $13,000 a year by using public transit instead of driving.
Tariffs will raise the price of the cheapest American cars by an additional $2,500 to $5,000 and up to $20,000 more for some imported models, according to Anderson Economic Group. That translates to a 13.5% average increase overall on car prices, the Yale Budget Lab said.
Some consumers have been rushing to dealerships to buy vehicles before price increases hit.
Price increases from tariffs may not change wealthier families' decisions to purchase a new car. But the added cost may change the calculus for low-income households already stretched on their car payments or push younger, first-time buyers to delay purchases, said Nicholas Bloom, a professor of urban policy and planning at Hunter College and the author of 'The Great American Transit Disaster.'
A boost for public transit would also benefit the environment. The transportation sector is the largest source of greenhouse emissions in the United States, accounting for over 28% of the total in 2022.
Buses and trains can reduce emissions by up to two-thirds per passenger compared to private cars.
It wouldn't be the first time in history that an economic shock pushed people to mass transit, Bloom said.
These patterns have been temporary, however, because US policy has historically prioritized building roads, highways, bridges and sprawling suburbs, often at the expense of funding transit, he said. About 87% of daily trips in the United States take place in cars, according to the Department of Transportation.
During World War II, the government halted the manufacturing of civilian cars and rationed the vehicles that were left for sale, compelling Americans to take mass transit in record numbers. But transit ridership collapsed after the war as millions of Americans left cities for new suburbs created by federal policies, which paid for the construction of highways and roads, and subsidized mass homeownership in the suburbs.
The energy crisis during the 1970s also pushed more people to carpool and use mass transit. But while European countries responded to the crisis by investing in public transit and pedestrian-friendly policies, the United States continued to focus on roadbuilding.
Higher gas prices also typically lead to an increase in transit ridership. Every 10% jump in gas prices can lead to as much as a 4% increase in bus ridership and an 8% increase for rail, a 2011 study found.
For example, in 2022, Russia's invasion of Ukraine sent gas prices soaring, giving transit a ridership bump — ridership increased 3% in New York City during the week after the invasion, 4% in Washington D.C. and 7% in San Francisco.
Public transit agencies could use the boost. Fares are a critical source of funding for transit agencies, particularly the largest transit systems in the United States.
Ridership still remains sluggish in many cities even five years after people shifted to working from home during the pandemic. Ridership is at about 85% of pre-pandemic levels nationwide, and transit agency budget shortfalls in Chicago and other cities around the country threaten service cuts, layoffs and fare hikes.
But higher car prices won't increase public transit ridership in areas with little or no mass transit options. For transit to be a viable alternative to driving, localities, states and the federal government must increase investments in frequent and reliable transit service, advocates say.
'Most American cities don't have great transit systems. That's because we don't invest in it,' said Midori Valdivia, a transit consultant and a board member of the New York Metropolitan Transportation Authority. 'Governments have not provided choices — taking a car feels like the only choice.'
About two-thirds of transit agencies' revenue comes from government, and most of that is state and local government. The federal government spends much more on roads than transit: Eighty percent of the federal gas tax, which helps fund infrastructure projects, is devoted to roads. Twenty percent goes to transit.
The Trump administration's Department of Transportation has been hostile to major transit initiatives in New York and California, revoking approval of New York City's congestion pricing program and announcing a review of California's high-speed rail project.
And Transportation Secretary Sean Duffy said the administration would prioritize projects and goals that 'give preference to communities with marriage and birth rates higher than the national average.' This would mean fewer funds for urban areas with higher transit use, according to an analysis by the Urban Institute.
'If we're pulling transit funding and increasing the cost of cars, that's more pain for families and leaving people in a lurch,' said Ben Furnas, the executive director of Transportation Alternatives, a transit advocacy group.
As the White House pulls back on mass transit, advocates are turning their attention to ballot box initiatives to fund mass transit.
In 2024, voters passed 46 of 53 ballot measures for funding public transit, providing $25 billion for projects like electrifying bus fleets, expanding service hours, subsidizing fares for low-income riders and other initiatives. Ballot measures to fund transit in San Francisco and Charlotte are being planned for this year and next.
'If there is an opportunity to invest in transit, that's what Americans want,' Valdivia said.