Trump signed an executive order on Monday to temporarily allow anyone to pump so-called red-dyed diesel, which is normally not allowed in road vehicles.
“This order will also drive down the costs of all goods, including groceries,” he added.
The spike in diesel has been magnified by Ukrainian attacks on refineries in Russia, one of the world’s top diesel exporters, and export restrictions in China. Diesel has risen 77% this year, putting it on track for the largest year-on-year percentage increase since AAA started tracking the data in 2000.
Here’s what to know about the order.
Dyed diesel is not available at most ordinary gas stations or truck stops, and it is normally prohibited for highway use. Instead, it is used off-road by farm vehicles like tractors. The fuel is marked with a small amount of red dye, so that inspectors can distinguish it from regular diesel.
What does the order say?
That means that vehicles can use dyed diesel fuel on highways without immediately paying federal taxes, while the Administration seeks to eliminate those deferred tax obligations entirely. The order also encourages states to halt inspections and suspend state taxes for on-road use of dyed diesel.
“We’re not going to need it long, I hope, we’re not going to need it long because your prices are plummeting and they’re going to really be plummeting,” Trump said.
But consumers may see some indirect savings on groceries and consumer goods through lower supply-chain costs, as the exemption seeks to lower costs for farmers and truckers.
The order also aims to help farmers, historically a key voting bloc for Republicans. Farmers have been squeezed by soaring fuel and fertilizer costs, as well as the fallout from Trump’s trade war with China and lingering tariff-related uncertainty.
The Michigan Farm Bureau, which called on Gov. Gretchen Whitmer to provide statewide relief on dyed diesel, also said waiving the penalties on highway use of dyed diesel would produce “an immediate, meaningful, and targeted relief from record fuel prices.” The bureau said farmers already have significant stores of dyed diesel for off-road use, making it an easily accessible option for use on highways.
These state measures largely target agricultural and timber haulers by temporarily waiving fines and penalties when dyed diesel is found in the tanks of vehicles on public highways.
Arkansas, Indiana, Missouri, Nebraska, and North Dakota also offered state tax relief for certain highway use of dyed diesel.
Some analysts, however, questioned how much relief the waiver can deliver without addressing underlying diesel supply constraints.
What other measures are on the table?
The Trump Administration has pursued other measures to lower fuel prices. Last week, the Group of 7 countries, which includes the U.S., agreed to release 100 million barrels of diesel and crude oil reserves over four months.
Last month, Trump weighed a ban on U.S. diesel exports, backed by some farm-state Republicans. But the President has not yet followed through on such an action, which would cut off global supplies from the world’s largest diesel exporter and likely worsen shortages around the world.
Some states have also pursued broader fuel tax relief. Georgia and Ohio temporarily suspended state taxes on gasoline and regular diesel, while Indiana extended its suspension on gasoline sales taxes. Earlier this year, Illinois postponed a scheduled gasoline tax increase, and Kentucky temporarily cut gasoline and diesel taxes by 10 cents a gallon. Massachusetts Governor Maura Healey also proposed a two-month gasoline and diesel tax holiday, which remains pending before the state legislature.
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