On January 28th, following his official inauguration as the United States Secretary of Transportation, Sean Duffy, nominated by President Trump (Donald Trump), signed a memorandum as his first act to abolish or lower the fuel efficiency standards for cars. This move aimed to reduce American car prices and eliminate the mandate on electric vehicles, yet it faced criticism from climate activists.
The official name for the car fuel efficiency standards is the Corporate Average Fuel Economy (CAFE) standard. This rule dates back to the oil crises of 1974 and 1980, with the U.S. government first introducing the CAFE standard in 1978, mandating car manufacturers to increase the miles per gallon for vehicles, with a requirement for the CAFE value of new car models to continuously increase each year.
The implementation of the standard stagnated in the 1980s, and for about two decades thereafter, there was no significant improvement in the miles per gallon for U.S. cars.
Originally aimed at saving fuel and saving consumers money on gasoline, in recent Democratic administrations, CAFE has also become a major way to regulate air pollution and address climate change.
Over the past decade, with the tightening of CAFE standards, the miles per gallon for U.S. cars has significantly increased.
During the Obama administration, the regulations required a yearly increase of 5% in miles per gallon. It took Trump over two years in his first presidential term, until 2020, to relax this restriction to an annual increase of 1.5%, valid until 2026.
Under the new standards implemented by the Biden administration in January 2021, car manufacturers are required to achieve an average miles per gallon of 38 miles by 2031, compared to the current average of about 28 miles per gallon.
According to the Biden administration’s requirements, from 2027 to 2031, each year, the CAFE value for passenger cars is to increase by 2%, and for SUVs and other light trucks, the CAFE value will increase by 2% annually from 2029 to 2031.
These standards reflect the Biden administration’s stricter limits on emissions for passenger and commercial vehicles, as well as broader support for stimulating the manufacture and purchase of electric vehicles.
The Biden administration believes that this action can help save nearly 70 billion gallons of gasoline by 2050.
On January 28th, after being sworn in as the U.S. Secretary of Transportation, Duffy responded to President Trump’s pledge to lead America into a “Golden Age.” He stated, “We have been working to carry out President Trump’s vision of eliminating government overreach and reducing costs for hard-working Americans through immediate action, ushering in a golden age of transportation.”
As his first action after assuming office as Secretary of Transportation, Duffy signed a memorandum titled “Fixing the CAFE Program,” mentioning that the memorandum aimed to reduce burdensome and overly restrictive fuel standards that unnecessarily drive up car costs, in support of a radical “green new deal” agenda. He stressed that Americans should not be forced to sacrifice choices and affordability when buying new cars.
The memorandum, based on two executive orders issued by President Trump on January 20th, required the U.S. National Highway Traffic Safety Administration (NHTSA) and other relevant agencies within the Department of Transportation to “repeal or replace all existing CAFE standards” to align with President Trump’s priorities promoting oil and biofuel.
Duffy stated in the memorandum that the CAFE standards he targeted “weakened the strength of the U.S. auto industry and prevented Americans from having access to a variety of affordable vehicles they need.”
According to data from Cox Automotive quoted on the Trump Transportation Department website, the total cost of a car increased by 15.5% from an average of $40,881 in March 2021 to an average of $47,218 in March 2024.
The Biden administration’s requirements mandate that 2031 models of all passenger cars and light trucks achieve a standard of 50.4 miles per gallon. This directive is expected to significantly raise the average price of a new car to nearly $48,000, making it challenging for American consumers to afford.
In the past four years, car prices have seen a continuous rise. In March 2024, out of 275 new vehicles available for purchase, only 8 had transaction prices below $25,000. In comparison, in March 2021, over 20 new cars had transaction prices below $25,000.
Duffy stated that the artificially high CAFE standards forced car manufacturers to gradually phase out gasoline-powered vehicles, making cars more expensive for consumers and “undermining consumer choice at the dealerships.”
He wrote in the memorandum, “These fuel economy standards are set at radical levels that car manufacturers cannot meet, essentially forcing car manufacturers to quickly transition from producing internal combustion engine vehicles to alternative electric technology to meet these standards.”
Duffy believes that CAFE rules should establish standards that are practical for vehicles using combustible liquid fuels such as gasoline and diesel. He pointed out that the U.S. has significant oil reserves, biofuel feedstocks, and refining capacity to support lower CAFE standards.
During the 2024 presidential campaign, Trump often criticized the Biden administration’s “electric vehicle mandate” – the Biden administration’s goal is for 50% of new car sales to be electric vehicles by 2030. One of the executive orders Trump signed shortly after taking office was to “Cancel the ‘Electric Vehicle Mandate’.”
In addition to setting high standards for car fuel efficiency, Democratic administrations in recent years have also imposed strict limits on vehicle tailpipe emissions. According to the Environmental Protection Agency’s (EPA) regulations on vehicle emissions, by 2032, only 29% of new vehicles on the market might be gasoline-powered.
The Biden administration does not mandate car manufacturers to produce electric vehicles or consumers to purchase them. The CAFE standards along with tailpipe emission standards are coordinated actions by its Department of Transportation and the EPA to address climate change. President Trump has taken a refusal stance on this issue.
Duffy, a former Republican congressman from Wisconsin, openly questioned the climate change movement. During his confirmation hearing earlier this month, Duffy pledged to provide safer Boeing planes for America, reduce regulations, and assist American autonomous driving tech companies.
Duffy stated that rescinding CAFE requirements will give Americans more opportunities to obtain the varied gasoline vehicles they need and can afford.
Dan Becker, director of the Center for Biological Diversity’s Safe Climate Transport Campaign, disagreed with the move and told the Associated Press, “This will increase consumer gasoline costs, increase air pollution, and jeopardize the future of American car manufacturers, and no one will vote for any of that. The only beneficiaries will be oil executives and China’s car industry, as they will be more than happy to sell electric cars globally while the U.S. has negligible competition.”
Roland Hwang, policy director at the UC Davis Institute of Transportation Studies, also expressed opposing views, stating to the Associated Press, “Given the background of trying to lower consumer costs and help U.S. industry become more competitive, it is difficult to understand this action as it will have the opposite effect.”
He further remarked, “Creating this kind of regulatory uncertainty will expose a significant number of car manufacturers’ employment and investments to risks and weaken the global competitiveness of the U.S. auto industry. Stringent fuel economy standards are crucial to ensure that car manufacturers invest in necessary advanced technologies.”
However, the automotive industry welcomed the new move by the Trump Transportation Department. John Bozzella, President and CEO of the Alliance for Automotive Innovation, representing the industry, stated, “The new leadership at the Department of Transportation reviewing the current fuel efficiency standards is reasonable. Even in the best-case scenarios, the existing CAFE rules are challenging to meet, and these rules make automakers face billions of dollars in civil penalties.”
Bozzella highlighted that the restrictions on U.S. cars are regulated by three federal agencies and multiple rules, so any modifications proposed by the Trump administration regarding CAFE standards must be coordinated with regulations governed by the EPA and the Department of Energy.
Currently, Lee Zeldin, Trump’s nominee for EPA Administrator, a former congressman, was confirmed by the Senate on January 29th.
The confirmation process for Chris Wright, Trump’s nominee for Energy Secretary, is ongoing. Wright is a technology entrepreneur.
Zeldin and Wright both support Trump’s “America First” agenda, and it is expected that they will collaborate across departments with Duffy to work together on releasing energy, lowering fuel prices, reducing car costs, and consumer gasoline expenses, as part of President Trump’s priorities.