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U.S. President Donald Trump delivers remarks at American Center for Mobility in Ypsilanti, Michigan with General Motors CEO Mary Barra and Dennis Williams, United Auto Workers president on March 15, 2017. (NICHOLAS KAMM/AFP/Getty Images)
U.S. President Donald Trump delivers remarks at American Center for Mobility in Ypsilanti, Michigan with General Motors CEO Mary Barra and Dennis Williams, United Auto Workers president on March 15, 2017. (NICHOLAS KAMM/AFP/Getty Images)

Trump targets fuel-efficiency standards Add to ...

U.S. President Donald Trump has indicated his administration will overhaul tough vehicle fuel-efficiency standards put in place by the Obama administration, as he pledged to eliminate any regulation that burdens the American manufacturing sector.

In a speech at a vehicle-testing site in Ypsilanti, Mich., Mr. Trump vowed to reinvigorate the domestic auto industry through protectionist trade measures and deregulation. He and U.S. Environmental Protection Agency (EPA) administrator Scott Pruitt are taking aim at a host of Obama-era climate policies they say are too onerous for U.S. companies and consumers.

By revisiting the fuel-efficiency regulations, Mr. Trump is targeting a policy that is central to what has been a joint Canada-U.S. effort to reduce greenhouse gas emissions in the transportation sector.

Any U.S. move to weaken the standards would put pressure on Prime Minister Justin Trudeau to decide whether to proceed with costly climate regulations in Canada at the risk of losing investment and jobs here.

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In his speech, the President announced the EPA is reinstating a promised review of regulations that set fuel-efficiency standards for the 2022-25 period and that industry complains are too costly. Over the objections of auto manufacturers, the Obama administration finalized the rules just weeks before Mr. Trump took office, saying the planned 2018 review was no longer needed.

Mr. Trump indicated he is sympathetic to the industry complaint that the regulations would impose an undue burden.

“If the standards threatened auto jobs, then common-sense changes could have and should have been made,” he said. “We are going to restore the originally scheduled midterm review, and we are going to ensure that any regulations we have protect and defend your jobs, your factories.”

He also took aim at the North American free-trade agreement, saying a third of U.S. manufacturing jobs were lost after it came into force. He criticized former administrations that provided liberalized access for foreign car makers without insisting the other countries open their markets to American-made vehicles.

“Our great presidents from Washington, to Jefferson, to Jackson, to Lincoln all understood that a great nation must protect its manufacturing, must protect itself from the outside,” he said during a campaign-style speech in the state he narrowly won in last November’s presidential election.

If he does indeed weaken the standards, Mr. Trudeau would have to decide whether Canada would move in lock-step as the Canadian industry urges, or if it would continue with the existing regulations, which are already counted in the Liberal government’s climate-change strategy.

Ottawa could align itself with California, a state that appears determined to keep the current standards that were set in 2012, although there may be a fight looming over whether the Trump administration will grant California the waiver it needs to set its own fuel-efficiency rules.

Environment Minister Catherine McKenna is in Washington this week and is scheduled to meet with Mr. Pruitt on Thursday. In a statement, she noted cars account for more than 10 per cent of Canada’s greenhouse gas emissions.

“Fuel economy standards support innovation, keep our air clean and save money at the pump – all things Canadians want,” the minister said. She added the Liberal government will “monitor developments in the U.S., with a view to doing the right thing for Canadian consumers and producers.”

Given the integrated nature of the North American vehicle market and the size of the Canadian market, the federal government needs to adopt the same standards as U.S. regulators when it comes to emissions and fuel economy, said Mark Nantais, president of the Canadian Vehicle Manufacturers’ Association, which represents the Canadian units of the Detroit Three auto makers.

“Whatever the decision is, we would hope that Canada would continue with its policy to harmonize its standards with the U.S.,” Mr. Nantais said. “That’s a process that has provided real benefits in terms of maximizing environmental benefits, preserving consumer choice [and] affordability because we can leverage the North American market.”

Under former U.S. president Barack Obama, the EPA set rules in 2012 to reduce carbon-dioxide emissions from light-duty vehicles by requiring manufacturers to boost average fuel efficiency by nearly 50 per cent by 2025. Canada’s former Conservative government matched those regulations, saying it was important to harmonize with U.S. climate policies. However, under pressure from the auto industry, the Obama administration agreed to review those regulations in 2018 before finalizing the 2022-25 standards, which would take the average vehicle fuel efficiency to 54.5 miles a gallon in 2025, or 4.3 litres for every 100 kilometres.

In a release on Wednesday, Mr. Pruitt said the 2022-25 regulations are “costly for auto makers and the American people.” The new EPA head said last week he does not believe the agency should regulate carbon dioxide to combat climate change.

When the regulations were first set, Environment Canada estimated the benefits in terms of reduced fuel use and environmental protection would far outweigh the costs. It estimated the regulations would drive up the cost of a new vehicle by $2,000 in 2025, but the higher price would be recouped in two years through savings at the gas pump.

The federal government also estimated the regulations would reduce carbon-dioxide emissions by nearly 20 megatonnes annually on average between 2017 and 2025, with the annual reduction increasing over time.

“It’s a hugely significant measure,” said Erin Flanagan, director for federal policy at the Calgary-based Pembina Institute. To meet Ottawa’s 2030 climate target, “we need to go forward with everything we have in place, and put in place additional measures.”

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