The Trump administration today announced that California will no longer be allowed to impose its own mileage requirements on new cars. This reasonable measure prevents one of two costly outcomes.
The first is an environment where carmakers have to design cars to meet at least two different mileage requirements: one for California, and another for the rest of the country. This would burden interstate commerce by creating different regulations for cars sold in different states.
Even worse, due to the size of California’s market, carmakers might design vehicles to meet the state’s regulations, and sell those vehicles nationwide regardless of what federal standards might be in place.
This would disenfranchise Americans in the rest of the country, whose car choices would be determined by California laws and regulations in which they have no say. As Environmental Protection Agency (EPA) administrator Andrew Wheeler observed, “...federalism does not mean that one state can dictate standards for the nation." Transportation Secretary Elaine Chao today added: “No state has the right to impose its policies on everybody else.”
President Trump says this action will make new cars more affordable while improving safety by encouraging more purchases of new, safer cars. Of course, Americans remain free to buy affordable, fuel-efficient cars that save them money in the long run.
Unfortunately, the Trump administration’s efforts to make vehicles more affordable and safe could be undermined by new taxes of up to 25 percent on imported cars. A 2018 NTU Foundation report estimated that a 25 percent import tax would result in a price increase of $1,262 for U.S.-assembled cars and $4,205 for imported cars. New auto taxes would encourage Americans to drive older, less-safe cars, and price increases resulting from new taxes would offset the benefits of this week’s regulatory reforms.
The Trump administration should put car buyers in the driver’s seat when shopping for new vehicles. Preventing lawmakers in Sacramento, CA from determining what kind of cars Americans can buy is a good first step. The next step should be to drop threats to increase taxes on imported vehicles and parts.