Recently imposed tariffs will substantially increase the base cost of a car, but exorbitant transportation costs for Americans are nothing new. We should be striving to make transportation more affordable, with cleaner cars and better, more accessible transportation options that eliminate the need for Americans to own a car.
Earlier this month, President Trump imposed sweeping tariffs, including on imported cars and parts. Others have covered in great detail the impact on the cost of new cars, including imported vehicles, but also those assembled here with parts that criss-cross borders with Mexico and Canada. American cars were already expensive due to the domestic industry’s focus on more profitable, larger models. The few modestly priced domestic cars could become even less profitable under the tariff regime because of imported parts and are at risk of being discontinued. Modestly priced imported cars will also obviously become more expensive with the added tariff. Many Americans will likely delay new car purchases, but repairs will also be more expensive due to tariffs on car components.
These tariffs are adding insult to injury since car ownership is already so expensive. The average 2025 sales price for a new car before these new tariffs is up almost 30 percent since 2018 to $48,401. The America Automobile Association (AAA) estimates the annual cost of car ownership at $12,297. This includes depreciation, gas, maintenance, and repairs. In fact, Americans spend 18 percent of their income on transportation, compared with only 11 percent in the European Union. The percentage is much higher for lower-income families and represents a burden that contributes to keeping Americans in poverty.
America’s transportation costs aren’t just bad for families. Our approach to transportation costs the taxpayer. There’s a common misconception that gas taxes and tolls cover the cost of roads, but in reality these sources only cover a small proportion of road costs. Road maintenance sucks up general fund money—taxes you and I pay regardless of whether we drive—at many levels of government. Congress, for example, has transferred $275 billion from the federal general fund since 2008 to cover shortfalls in the highway trust fund.
Tariffs could also increase the cost of road and bridge maintenance. Roads and highways are expensive to maintain, but they also undercut the tax base. That’s because they occupy land that could otherwise produce tax revenue, and our dangerous car-dependent roadways kill and injure many people, which costs lives, degrades quality of life, and increases health costs.
Safer, greener cars
American policy should favor more modest and cleaner cars instead of larger, dirtier ones. Unfortunately, the National Highway Transportation Safety Administration (NHTSA) has failed to address the danger of large vehicles with high front hoods that impede the drivers’ ability to see what is in front of their vehicle and increase the severity of crash impacts. This has diminished safety for everyone outside these cars. NHTSA has been extremely slow to even incorporate this issue into vehicle safety ratings, let alone regulate this trend that has contributed to the pedestrian safety crisis.
In addition, national CAFE (Corporate Average Fuel Economy) standards have had perverse incentives for decades that end up encouraging domestic car manufacturers to build larger vehicles with high clearance so that they don’t have to be as fuel efficient. These larger vehicles are also more expensive. For low-income families that might want an affordable used vehicle, big gas guzzlers are most of what’s on the market.
Affordable transportation options
If we really want to help families with affordability, making it possible to thrive in America without having to buy a car is the most effective way. If a household can meet their transportation needs with fewer cars, that would represent a massive cost savings for families. In the absence of affordable cars, we need affordable options like walking, biking, and public transit.
T4America’s principles provide a roadmap for getting there. Create a safe environment for walking and biking by designing for safety over speed. Refocus the highway program on fixing it first instead of expanding highways, which encourages sprawl and car dependency. And invest in the rest: transit, walking, and biking infrastructure so that everyone has more affordable options. We also need more abundant housing near jobs, services, and transportation options (which, by the way, would help to address the housing affordability crisis). The Center for Neighborhood Technology’s Housing + Transportation Index and State Smart Transportation Institute’s Measuring Accessibility Guide can help illuminate where more housing would deliver affordable transportation.
America’s affordability crisis was bad, and it looks like it’s about to get worse, but we have the tools to address it if we’re willing to shed the status quo.
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