Trump signs executive order allowing use of untaxed diesel on US roads

Administrative decision on the fuel market

United States President Donald Trump officially approved an executive order aimed at reducing the financial burden on the transport and agricultural sectors by lowering the cost of diesel fuel. The main mechanism for implementing this decision was the removal of restrictions on the use of so-called "red" diesel, which is not subject to taxation.

Announcement of the initiative in Nebraska

The American leader announced this decision during a campaign event in the state of Nebraska. This region was particularly affected by the sharp spike in diesel fuel prices. Trump emphasised the broader economic impact of the move:

«Цей указ також знизить вартість усіх товарів, зокрема продуктів харчування», – сказав він. ("This executive order will also lower the cost of all goods, including food," he said.)

Technical features of "red" diesel

In terms of chemical composition, red diesel fuel is identical to regular road diesel. The difference lies in the fact that it is untaxed and dyed red to visually distinguish it from resources intended for use on public roads. This type of fuel is typically used in agricultural machinery, tractors, and industrial equipment that does not participate in road traffic.

Benefits for logistics and the agri-sector

Expanding the possibilities for using untaxed diesel could be particularly beneficial for freight carriers facing uncontrolled growth in fuel costs. This step could also help farmers who rely on trucks to transport their harvest to markets, as well as to deliver fertilisers and other necessary materials to their fields.

Details of the White House executive order

According to an official statement released by the White House, the order "will temporarily allow the use of dyed diesel fuel for off-road purposes on highways and defer payment of the corresponding federal excise tax, reducing costs for Americans".

The document states that the President directed the Secretary of the Treasury, in coordination with the Secretary of Defense, to defer until the end of the current year the payment of the tax on the use of dyed diesel fuel on roads. This deferral is provided without interest or penalties. In addition, officials were ordered to "study the possibility of waiving the obligation to pay deferred taxes".

The administration also announced its intention to encourage more states to adopt similar policies and to ensure farmers' access to dyed diesel fuel in regions with high demand.

Price statistics and tax burden

The economic context for this decision was formed against the backdrop of a sharp rise in prices. In the US, the cost of diesel fuel rose from $3.76 per gallon (3.7 litres — Ed.) before the war with Iran to a record $6.53 per gallon on 22 September. At the beginning of the current week (on Monday), the average diesel price across the country was $6.32 per gallon.

Typically, the federal government levies a tax of 24.4 cents per gallon of diesel fuel intended for road use. Additionally, diesel is taxed at the state level — averaging 35.5 cents per gallon. Meanwhile, states are already independently taking measures to help long-haul truckers cope with high diesel prices.