President Trump will announce Wednesday that he's reopening a review of Obama-era fuel economy rules, after the EPA broke an agreement with the auto industry last year and accelerated the final tailpipe emissions standards for cars and light trucks.
Mr. Trump is traveling to Ypsilanti, Michigan, where he'll grant the regulatory reprieve for the industry in front of an audience of auto workers. Michigan Gov. Rick Snyder is expected to attend the event.
The fuel standards, which call for manufacturers to boost their fleet-wide fuel economy to an average of 50.8 mpg by 2025 from the current 35.3 mpg, would remain in place while under review. Automakers say low gasoline prices are driving consumers toward pickup trucks and sport-utility vehicles, making the tougher fuel efficiency standards harder to achieve.
A senior White House official said the Obama administration broke an agreement with automakers last year by locking in the tougher fuel standards instead of waiting for a midterm review set for 2018.
"The auto industry rightly cried foul," the official said. "We're going to get this agreement back on track."
In the meeting with auto executives and workers, Mr. Trump "will discuss how his plans for rolling back federal red tape will lead to more American jobs and higher wages, specifically in the automobile sector," White House press secretary Sean Spicer said Tuesday.
Opponents of the move said it's unnecessary, saying the auto industry had two of its best years in 2015 and 2016.
"Automakers are meeting the standards and thriving," said the Union of Concerned Scientists. "The point is not to force them to stop selling big vehicles and start selling smaller ones, but rather to make today's big vehicles cleaner than last year's comparable vehicles."
The senior White House official, speaking on condition of anonymity, said the administration wants "to spend another year looking at data in front of us, making sure that it's right so that in 2018, we can set standards that are technologically feasible, economically feasible, while the auto industry continues to grow and create jobs."
A report last week from researchers at Indiana University's School of Public and Environmental Affairs said the Obama-era standards will cause "short-term pain" and long-term benefits if left in place.
"Due to unexpectedly low gas prices and tepid demand for electric and hybrid vehicles, the standards will have greater economic impact than envisioned when they were developed," said John Graham, dean of SPEA and co-author of the report. "Our findings don't call into question the need for regulation, but we found that the federal requirements need to be fine-tuned."
The researchers found that the short-term pain results from higher auto price tags due to new technology, and that the higher costs would curb sales and hurt employment in the auto industry and its supply chain, especially in the South and Midwest.