Trump defers diesel tax for truckers as fuel costs bite weeks before US midterms
US President Donald Trump has signed an executive order deferring tax payments on red-dyed diesel used on public roads, as near-record fuel prices linked to the Iran war weigh on the Republican Party weeks before the midterm elections.
Truckers, farmers and other diesel users in the US could benefit from deferred tax payments on fuel normally reserved for tractors and other off-road machinery, as the White House moves to ease a fuel squeeze that threatens to hurt the Republican Party in the midterm elections next month.
US President Donald Trump signed the order on Monday at a rally in Grand Island, Nebraska, where he was campaigning to fire up Republican voters.
Trump told supporters the order would "officially waive the off-road requirement and allow anyone to purchase tax-free red-dyed diesel for any reason."
Trump also conceded he was no expert on the fuel. "I don't know what the hell it is, but whatever it is, it's supposed to be very good," he joked.
The dyed fuel is almost identical to ordinary diesel but is exempt from highway taxes, and using it on public roads normally carries penalties.
"The federal diesel tax is 24.4 cents per gallon, or about $60 on a 250-gallon fill," the White House stated in a press release, adding that savings would top $100 per fill where states follow suit. For a large truck taking on 250 gallons, a fill costs about $1,580 including tax at Monday’s average diesel price.
However, the order itself is narrower than Trump's pitch to the crowd suggested.
It does not abolish the levy but postpones payment on dyed diesel used on roads between 5 October and 31 December, free of interest and penalties, and asks US Treasury Secretary Scott Bessent to find ways, including legislation, to "eliminate the obligation to pay the amounts deferred," the executive order said.
It relies on a law that lets the US Treasury postpone tax deadlines for people affected by disasters or military action, and gives Bessent five days, in consultation with US Secretary of War Pete Hegseth, to determine whether those conditions are met and which taxpayers qualify.
Unless the Trump administration finds a way to cancel it, the deferred diesel tax will still be owed once the relief period ends on 31 December.
While the White House has pitched the measure at truckers and farmers, the order itself does not single them out, in line with Trump's promise that anyone could buy the fuel. In practice, the relief matters mainly to those running diesel trucks and farm vehicles, as most American cars run on petrol.
Federal authorities and state governors may also choose to suspend inspections and drop the tax, the White House added.
Diesel squeeze
The average price of diesel in the US stood at $6.32 a gallon on Monday, according to motoring group AAA, just below the record $6.53 set on 22 September and more than 70% higher than a year ago.
Prices have soared since the Iran war began in February, disrupting shipping through the Strait of Hormuz, while Russia has curbed fuel exports after Ukrainian attacks on several of its refineries.
The White House announcement did not mention Iran, instead blaming "the Russia-Ukraine war and a lack of refining capacity around the world", as well as "Democrat-led states that chose to shut down their refineries in the name of 'Green Energy' policies".
Trump also pointed to the G7 deal struck last week to release 100 million barrels of refined diesel from strategic stocks over the next four months, after he had threatened to ban US diesel exports.
American farmers, who are in the middle of the harvest, welcomed the order.
"Every cent per gallon matters when you're running a fleet of grain trucks or hauling cattle hundreds of miles," said Zippy Duvall, president of the American Farm Bureau Federation, the country's biggest farm lobby.
Oil prices eased further on Tuesday as oil exports from the Gulf excluding Iran recovered towards pre-war levels.
Brent crude, the international benchmark, dropped below $100 a barrel in early trading, down roughly 2.5%, while the US benchmark West Texas Intermediate also fell 2.5% to under $88.
