Trump Guts Fuel Economy Rules Again, Dragging Standards Back to 2014 Levels

The Trump administration has rolled back federal fuel economy requirements for the second time, ordering automakers to hit an average of just 35 miles per gallon, a standard last seen more than a decade ago. The move effectively erases the tighter targets set during the Biden administration and even undercuts the looser rules Trump himself put in place during his first term.

The Corporate Average Fuel Economy, or CAFE, program sets the minimum mileage automakers must achieve across the vehicles they sell each year, with penalties for manufacturers that fall short. In 2020, Trump's Department of Transportation lowered the Obama-era trajectory and settled on roughly 40 mpg as the target. Now, in his second term, his administration has gone further, pushing the requirement down to about 35 mpg, a level comparable to where the program stood back in 2014.

Officials framing the rollback have pointed to cost, arguing that stricter mileage rules force automakers to build more expensive hybrid and electric models to balance out gas-guzzling trucks and SUVs, raising sticker prices for buyers. Critics see it differently. Environmental groups and fuel efficiency advocates argue the change removes one of the few regulatory levers pushing carmakers toward cleaner technology, and that it will lock in higher gasoline consumption and emissions for years, since vehicle designs and powertrain investments are typically planned five to ten years in advance.

The timing matters for the auto industry's product roadmaps. Automakers had already been recalibrating their electrification plans amid softer-than-expected EV demand and the rollback of federal EV tax credits earlier this year. A looser CAFE target gives manufacturers more room to keep selling larger, less efficient gas and diesel vehicles without investing as heavily in hybrid or battery-electric lineups to offset them. Companies that had leaned into efficiency gains to comply with the stricter Biden-era rules may now find themselves with less regulatory pressure to continue that spending, while holdouts on trucks and SUVs get more breathing room.

The change also reopens a familiar fight with California and the states that follow its emissions rules, which have historically pushed for standards well above the federal floor. Legal challenges are expected, as they were after the 2020 rollback, with environmental groups and blue-state attorneys general likely to argue the new rule ignores fuel savings and climate impacts required under the underlying statute. For now, the rule resets the baseline automakers must plan against, marking a sharp reversal from the tightening trajectory fuel economy standards had been on for most of the past two decades.