Trump Lets Truckers use Tax-Free Red Diesel as White House Scrambles to Cut Record Fuel Costs Before The Midterms

President Donald Trump is temporarily allowing tax-exempt red-dyed diesel to be used on U.S. highways, an extraordinary step aimed at cutting costs for truckers and farmers as record fuel prices squeeze businesses and consumers just weeks before the midterm elections.

Trump signed an executive order Monday temporarily expanding the use of red-dyed diesel, fuel normally reserved for off-road equipment and exempt from federal highway taxes. The administration is also deferring collection of the federal excise tax on highway diesel through the end of 2026, potentially giving the transportation industry additional relief as diesel prices remain near historic highs.

Red-dyed diesel is chemically similar to the diesel sold at highway fuel stations, but the dye identifies it as fuel on which highway taxes have not been paid. It is generally used in farm equipment, construction machinery, and other vehicles that do not operate on public roads.

Highway diesel is normally subject to a federal excise tax of 24.4 cents per gallon. Using dyed diesel in vehicles traveling on public roads has traditionally been illegal and can result in penalties for tax evasion. Under Trump's order, however, truckers and farmers will temporarily be able to use the cheaper fuel without facing those restrictions.

The White House estimates the change could save truckers more than $100 each time they fill their tanks, potentially offering some relief to an industry that has been hammered by the surge in energy costs.

Diesel prices climbed above $6 a gallon nationally in September for the first time on record as disruptions linked to the wars in Iran and Ukraine tightened global supplies. The increase is particularly significant because diesel powers much of the U.S. freight system, meaning higher prices can ripple through supply chains and ultimately raise the cost of food, consumer goods and other products transported by truck.

Americans are now spending about $700 million more every day on gasoline and diesel than they were a year ago, according to Bob McNally, president of energy consultancy Rapidan Energy.

The timing also creates a major political challenge for Trump and Republicans as voters prepare for November's midterm elections. The cost of living has remained a central concern for households, and transportation and energy costs can quickly filter into grocery bills and prices for other everyday goods.

Trump's order goes beyond temporarily expanding access to dyed diesel. It directs the Treasury secretary, in consultation with the Department of Defense, to defer collection of the federal excise tax on highway diesel through the end of 2026 without interest or penalties. Treasury officials were also instructed to explore ways to eliminate the obligation to repay those deferred taxes altogether.

The administration blamed the fuel spike on tight global energy supplies related to the war in Ukraine, insufficient refining capacity and other disruptions to international markets. Washington has also been pushing allies to increase available supplies.

Group of Seven nations agreed to release 100 million barrels of diesel and crude oil reserves after pressure from Trump, who had also raised the possibility of restricting U.S. fuel exports as his administration searched for ways to contain domestic prices. Several states had already relaxed enforcement surrounding tax-exempt diesel this year as fuel costs surged, but Trump's action broadens the federal response.