As gas prices continue to soar amid a seemingly endless war in Iran, the Trump administration is finally delivering relief to drivers burdened by high gas and record diesel prices: letting automakers keep making cars that use lots of gas. On Monday, the White House announced that the National Highway Traffic Safety Administration had finalized plans to roll back Biden-era corporate average fuel economy, or CAFE, standards. Previously, automakers were expected to achieve a fleet-wide fuel economy average of 50.4 miles per gallon by 2031. Under the new rules approved on Monday, that average is expected to be just 34.9 mpg. Reaching it requires a roughly 1 percent improvement each year, as opposed to the 8 percent annual improvement expected under Biden.
Predictably, the administration pitched the rollback as a godsend. Transportation Secretary Sean Duffy said its “Freedom Means Affordable Cars” initiative would “significantly reduce the cost of vehicles” and “revive the beating heart of American manufacturing and unshackle the nation’s automotive industry to produce safer, more affordable cars that American families want to buy.” Meanwhile, legacy U.S. automakers General Motors and Ford, and Stellantis—the European company that owns heritage brands like Dodge and Jeep—have welcomed the news, saying the new rules would “align regulations with market realities.”
But Trump’s relaxed standards get the problem of fuel prices inside out and upside down. It isn’t Biden’s supposed “E.V. Mandate” that’s been plaguing drivers and Detroit. While the administration has framed its war on fuel efficiency as a means of boosting the U.S. auto industry, carmakers’ Trump 2.0–era pivot away from fuel efficiency is coming back to bite them. At home and abroad, especially, consumers are opting for foreign competitors’ hybrid and E.V. models, which typically cost less to buy and drive. Coupled with tariffs that are raising costs across the board, this White House could end up being historically bad for Detroit.
For as much as Republicans have accused climate hawks of leading a war on cars, Trump’s foreign policy has done more to penalize driving than even Biden’s most zealous green bureaucrats. Gas prices in the U.S. have risen 43 percent since the start of the Iran war, costing drivers an estimated $43 billion. Those expenses come on top of new car prices that are now hovering around $50,000, not to mention rising borrowing costs and auto insurance premiums. Trump has imposed punishing tariffs on Canada—by far the largest export market for U.S. automakers. Just three months into a 25 percent import fee, sales of U.S.-built cars in Canada have dipped from 35.4 percent to just 28.4 percent. Those tariffs have prompted retaliatory duties from our northern neighbor, and are scheduled to double on January 1. Taken together, these developments represent a threat not just to sales in Canada but to U.S. manufacturing, which has been structured around long-standing free-trade agreements among North American countries. GM and Stellantis have already reported billions of dollars in losses as a result of tariffs. More than a third of the 75,000 U.S. manufacturing jobs lost since January 2025 are in motor vehicles and parts production.
All this is taking a visible toll on the auto industry. Ford sales are expected to drop by 8.8 percent for the first three-quarters of this year, with a 6.2 percent drop projected for General Motors, per Cox Automotive. The two legacy Detroit brands are on track to lose more market share in the U.S. than any other U.S. automaker, bringing overall “Big Three” market share to an all-time low of just 36 percent. Since the beginning of Trump’s second term, these companies have written off tens of billions of dollars’ worth of Biden-era investments in E.V.s and more fuel-efficient models to focus on selling gas-powered trucks and SUVs, including the powerful and gasoline-thirsty V8 engines. As gas prices have risen, a big beneficiary of Detroit’s doubling down on expensive gas-guzzlers has been brands offering relatively affordable hybrids to consumers wary of pain at the pump. Hyundai’s sales are likely to overtake Ford’s this quarter; hybrids now account for one in seven vehicles sold in the U.S., up from just 3 percent in 2020. Analysts expect domestic hybrid sales to double over the next decade. These trends could even help Toyota take General Motors’ spot as America’s bestselling automaker.
Even bigger storms are brewing. General Motors’ chief financial officer, Paul Jacobson, recently warned that the company’s competition in the U.S.—which largely bars Chinese cars—was intensifying as the U.S. becomes a “safe haven” for foreign automakers being pummeled in their domestic and international markets by brands like BYD and Geely. It might now only be a matter of time before those brands are allowed to compete in the U.S. too; Trump has even signaled he’d be open to it. Legacy automakers’ decades-long dominance within America’s safe haven for big, expensive trucks and SUVs may be numbered. As the competition gets closer, they might have buyers’ remorse for following Trump’s lead.
