For President Donald Trump, environmental regulations often feel like a drag on American industry and personal freedom. He argues they boost costs while harming performance, citing frustrations with supposedly over-regulated toilets and showerheads. Trump entered his second term aiming to unshackle the economy through deregulation. However, one major consequence of this approach could be higher prices for consumers – particularly those filling up their gas tanks.
The average sticker price for a new car crossed $50,000 for the first time in September 2019, according to Kelley Blue Book. This isn’t just a matter of inflated prices at dealerships; owning a car is becoming increasingly expensive for many Americans. The single biggest yearly energy expense for most households is gasoline, averaging around $2,930 per year.
While stricter regulations on appliances or light bulbs might initially bump up their price tags (though manufacturers often recoup this through long-term savings), the picture gets more complicated with items like cars, solar panels, electronics, and appliances. These products frequently pay for themselves through lower operating costs over their lifespan. Trump’s push to roll back efficiency standards simultaneously hinders these industries while adding pressure on household budgets.
No industry grapples with this better than the U.S. auto sector. It has been caught in a whirlwind of changing environmental regulations since President Obama tightened vehicle efficiency and pollution standards. Trump loosened them during his first term, only for President Biden to reinstate and strengthen them later. Now, with another turn towards deregulation under way, the $1.6 trillion industry finds itself once again adrift, unsure of what direction to take.
A Rollercoaster Ride for Regulations
In July 2023, the Environmental Protection Agency (EPA) began dismantling a crucial legal foundation allowing it to limit car emissions. This weakens the EPA’s power to mandate cleaner vehicles from automakers, hindering efforts to curb one of the largest contributors to carbon emissions: transportation.
Sean P. Duffy, Trump’s Transportation Secretary, claimed these moves would “lower vehicle costs and ensure the American people can purchase the cars they want.” However, the reality could be quite different. Frequent rule shifts make it challenging for automakers to meet existing benchmarks and plan strategically for the future.
The Alliance for Automotive Innovation, representing companies like Ford, Toyota, and Volkswagen, expressed concerns in a September letter to the EPA, stating that the administration’s actions and the elimination of EV tax incentives make the current car pollution rules set under Biden (spanning through 2027) “simply not achievable.” The Trump administration responded by eliminating penalties for non-compliance, but the industry is already bracing for potential drastic changes should rules shift again after a post-Trump presidency.
Automakers prefer regulatory stability. Implementing stricter standards requires years and billions of dollars in research and development for new models. Each change adds to the cost and complexity, ultimately influencing the final price consumers pay.
Uncertainty also stymies electric vehicle (EV) manufacturers. EVs are gaining momentum both domestically and globally, despite Trump’s termination of federal tax incentives for them. The administration further complicates matters by withdrawing support for domestic battery production essential for U.S. automakers to build EVs competitively.
“Particularly in the last six months, I think ‘chaos’ is a good word because they’re getting hit from every angle,” – David Cooke, senior associate director at the Center for Automotive Research at Ohio State University
This regulatory turbulence directly translates to higher costs for car buyers and poses long-term environmental and health repercussions.
The Hidden Cost of Pollution
Reversing efficiency targets will slow progress towards cleaner vehicles, leaving consumers stuck with less fuel-efficient cars that cost more to operate. Studies by Energy Innovation, a think tank, reveal that repealing tailpipe standards could saddle households with an additional $310 billion by 2050 – primarily through increased gasoline expenditures. These moves would also exacerbate air pollution and stifle the burgeoning U.S. electric vehicle manufacturing sector due to reduced demand. Even the Trump administration’s own analysis of the consequences of dismantling EPA greenhouse-gas emission regulations acknowledged that these actions would drive up gas prices because of higher fuel consumption from less efficient vehicles.
While deregulation might seem like a quick fix for immediate industry pressures, its long-term impact on consumers paints a far bleaker picture: higher costs at the pump and diminished air quality while progress towards a cleaner transportation sector stalls.
