Most Americans have a car, which allows them to skip using public transportation – which, in turn, allows governments to spend less on public transportation. Could car tariffs put an end to this self-perpetuating cycle?
Understanding the automobile tariff
As of April 2, imported cars and auto parts face a 25% tariff. Of course, in a global manufacturing environment, cars aren’t made in one place. Eventually, the tariff recipe will shift to focus instead on car parts. (Consider the complexity of value-added tax. Formulating what’s made abroad, what’s made here, and what everyone owes may take some time.) Parts made in Canada and Mexico won’t gain a tariff if their firms are in compliance with the USMCA trade deal, which in 2020 took the place of NAFTA.
Personal vehicle as a household expense
President Donald Trump wants to alter the USMCA deal he pushed five years ago and add tariffs for most imports. On Wednesday, Trump announced a 90-day tariff reprieve. He hopes countries will negotiate lower tariffs on US goods. However, the reprieve didn’t include automobile tariffs. They’re still in place. The price of a car in the US is forecast to rise anywhere from $2,500 for the very cheapest to $20,000 for an expensive one.
After housing, cars are US households’ largest expense. More expensive cars won’t be tenable for many lower-income Americans who spend an average of 30% of their income on their personal vehicles.
Adoption of public transit under duress
Will people leave their cars at home (or at the dealership) and use public transit more often?
Historically, when car travel gets more expensive, they do. In 2022 when oil prices soared after Russia invaded Ukraine, public transit usage increased in New York City by 3%, in Washington, D.C., by 4% and in San Francisco by 7%.
Almost 92% of US households have at least one car. (The New York City metropolitan area has the lowest, at 70%. Panama City, Fla., has the highest, at 98%, with some Utah cities close behind.)
With less than 20,000 people, Panama City will most likely remain reliant on personal vehicles to get to work, the grocery store, the beach and, really, anywhere. But it may dream of city-like transit. (It did name itself, perhaps aspirationally, a city, after all.) Subways may be out of reach, but public buses and micro-transit alternatives, such as cycling infrastructure, might be options to explore.
Public transit builds quality cities
The benefits of ditching the car may go far beyond saving a little money. Economic and urban development consultancy Resonance regularly ranks cities. In its 2025 report on the best cities globally, cities with well-used public transportation ranked highest, with London again taking the top spot.
More riders have always been the answer to quality public transportation. That, too, is self-perpetuating.
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