Rollback of fuel standards is bad policy
On Dec. 3, President Trump drastically reduced CAFE (Corporate Average Fuel Economy) standards on new passenger cars and light trucks, regressing back to 2022 levels and reducing the previous 2031 target of 65.1 MPG to 46.2, arguing that this will reduce new vehicle prices nearly $1,000. Given that most experts agree that tariffs will increase new car prices by $3,000 to $12,000, any savings would be welcome.
Unfortunately, the revised standards won’t provide near-term price relief unless automakers strip mileage-enhancing components from current designs and pass savings on to buyers. Also, the rollback is largely superfluous given that the president previously retroactively eliminated fines to automakers who didn’t meet the standard from 2022 onward, saving manufacturers hundreds of millions and removing their motivation to increase fuel economy.
The claimed $1,000 savings also vanishes when considering increased fuel costs of $2,000 to $5,200 over the eight-year period during which the average American owns a new car. Plus, increased fuel demand supports higher fuel prices and greater emissions. In short, the American consumer and the environment both lose.
Who wins? Automakers benefit from the absence of fines and selling more high-margin, lower-efficiency SUV’s. Oil producers — foreign suppliers providing roughly one-third of U.S. oil and domestic companies promised regulatory favors — stand to gain the most. Domestic firms have already received $3.7 billion in new subsidies under the recently passed “One, Big, Beautiful Bill (OBBA),” on top of $25.5 billion in pre-OBBA subsidies.
Of course, the administration also hopes to claim victory by presenting the rollback as a bold move on affordability. The original standards were instituted to protect the environment, reduce dependence on foreign oil — a clear national security concern — and spur innovation. Rolling them back abandons these priorities. Worse, it undermines consumers financially while rewarding industries already heavily subsidized.
Robert Wedoff
Arlington Heights