Trump allows tax-exempt red diesel for highway use, but the move does little to fix the U.S. diesel shortage

U.S. President Donald Trump signed an executive order on Monday temporarily allowing tax-exempt red diesel, which is typically reserved for agricultural, mining, and other off-road uses, to enter the highway transportation market. The measure is aimed at easing logistics costs by reducing the fuel tax burden on truck operators. Standard on-road diesel in the United States is currently subject to a federal excise tax of 24.3 cents per gallon, while red diesel is usually exempt. In theory, if the policy is fully passed through to end users, diesel costs could fall by as much as roughly 24.4 cents per gallon. Still, the order does not add new diesel output. It changes tax treatment and usage rules, not supply. U.S. diesel markets remain under pressure as refineries run at high operating rates, Russia restricts refined product exports, and Middle East refined fuel supplies face disruptions. Industry groups have also warned that a shift by truckers to rural supply channels could squeeze fuel availability for farm equipment during North America’s peak autumn harvest season.