Unless something major comes out of the investigations into the Trump campaign’s affiliation with Russia, it’s likely that Donald Trump’s first term will be judged primarily on his wins and losses. But while the effort to repeal and replace Obamacare went up in smoke, Trump has racked up wins on the job creation front, and he clearly has his eyes set on more.
To appeal to job creators, Trump has taken a buckshot approach, lobbying companies in various industries to grow their businesses in America while also promising favorable changes to tax policy (that he may not be able to deliver) and continuing to cut regulations. Specifically, environmental regulations that were put in place by President Obama. And it’s that last method that may align Trump with Detroit and the American automobile manufacturing sector.
While big auto just saw positive gains in sales, bringing in $17.55 million in 2016, the looming increases in CAFE standards [Corporate Average Fuel Economy, meaning the average MPG (miles per gallon) of a company’s cars and light trucks] could take a toll on future profits. At least that’s what industry forces are whispering in Trump’s ear to great effect as he considers cutting those standards.
How We Got Here
Protective regulatory efforts are designed to curb current behavior and repent for past sins. And we’ve got a whole lot of the latter. In part, it’s because we didn’t have the sense to know that widespread pollution and the industrial revolution were making the earth unwell, but there were a few telltale signs. The Cuyahoga River catching on fire was a clue, and shortly after that event in 1969, the EPA was established, kickstarting an era of reforms.
The CAFE standard was put in place in 1975 to tamp down carbon emissions by reigning in hungry gas guzzlers and spurring innovation. Is it a burden on car companies? Anything that slows profit could be considered a burden — regulations, diminished interest in the market, the pangs of a conscience — but sometimes it’s worth the hurt.
And let’s remember that those car companies have found a way to prosper in that CAFE standards have doubtlessly nudged car companies toward the future, and that fuel economy, as of a 2015 study, was the most important factor for people when they were buying a car. Because, of course, it all relates to how much people drop at the pump, which relates to how much money they have in their wallets. People like money, thus, they should like fuel economy. Especially since, as we’ve seen over the last 14 years, fuel prices can balloon and cause a crippling burden on people who don’t have a lot of disposable income.
President Obama was aware of this, which is why he battled to improve standards. Obama came to a 2011 agreement with automakers that would increase fuel efficiency to 54.5 MPG by model year 2025, which, if fully implemented (a massively big “if” at this point), could cut oil consumption by 12 billion barrels.
The goal was and still is big and maybe impossible. And with automakers now proclaiming that they would need to raise vehicle prices and cut manufacturing jobs (as many as one million) to make getting to 54.5 mpg economically feasible, environmentalists are concerned that no one is going to be a voice on their side in the halls of power. Especially with this review of the policy being done under the watch of anti-regulation zealot Trump and climate change denier and EPA head Scott Pruitt. The question is: will Trump propose new targets, and will they be reasonable or a reversal of years of progress in the effort to make America less dependent on fossil fuels?