Donald Trump issues order to start producing smaller cars

President Donald Trump announced on Wednesday that he would loosen regulations to permit the production of smaller, more compact cars in the U.S.

The president said in the Oval Office that he had directed Transportation Secretary Sean Duffy to remove barriers to the manufacturing and marketing of these cars in the United States. Trump also announced that the government would be rolling back Biden-era fuel efficiency standards that the administration said “effectively resulted in an electric vehicle (EV) mandate.”

Newsweek has contacted the Department of Transportation for comment via email outside regular hours.

Why It Matters

The administration believes the compact cars would prove more fuel-efficient and affordable than those already available on the market, and Trump said manufacturing these domestically would allow more households to be able to afford a new vehicle.

The Department of Transportation said the resetting of fuel-economy standards is projected to “save the American people $109 billion over the next five years and save families $1,000 on the average cost of a new vehicle.” Environmental advocates, however, have criticized the move as a setback for the climate, public health and affordability.

What To Know

Trump said he drew inspiration for the idea from recent visits to East Asia, where he was apparently impressed by the ultracompact cars in Japan.

“They’re very small. They’re really cute,” Trump said. “And I said, ‘How would that do in this country?’ And everyone seems to think good. But you’re not allowed to build them.”

Several regulatory and nonregulatory barriers have historically prevented ultracompact vehicles, such as Japan’s “kei” cars, from taking off in the U.S.

Corporate Average Fuel Economy (CAFE) standards established in the 1970s have typically favored larger vehicles, which are better able to meet these efficiency targets. The National Highway Traffic Safety Administration has also historically argued that smaller vehicles present greater road safety risks, while the relatively low cost of fuel in the U.S. has minimized consumer demand for such vehicles and dissuaded companies such as Honda from investing in marketing them to Americans.

“The reason Japanese carmakers don’t make or sell kei cars in the U.S. is business feasibility,” Bloomberg Intelligence senior auto analyst Tatsuo Yoshida said on Thursday, adding that “pricing and costs don’t match.”

Still, Duffy said on Wednesday that, should any company want to make smaller, more fuel-efficient cars, the Trump administration has “cleared the deck so they can make them in America and sell them in America.”

Trump added that these vehicles would be more affordable and give Americans the chance to own “a brand-new car as opposed to a car that maybe isn’t so great.”

Trump said the announcement was separate from the rollback of vehicle fuel-economy regulations and the resetting of CAFE standards adopted under the Biden administration, which he described as “ridiculously burdensome.”

The president was joined in the Oval Office by the CEOs of Ford, General Motors and Stellantis—the U.S.’s “Big Three” automakers—who lent their support to the change. Ford CEO Jim Farley described this as “a victory [for] common sense and affordability.”

What People Are Saying

President Donald Trump said during a news briefing in the Oval Office on Wednesday: “If you go to Japan, where I just left, and if you go to South Korea and Malaysia and other countries, they have a very small car—sort of like the Beetle used to be with the Volkswagen. They’re very small. They’re really cute. And I said, ‘How would that do in this country?’ And everyone seems to think good. But you’re not allowed to build them. And I’ve authorized the secretary [of transportation] to immediately approve the production of those cars.”

Katherine Garcia, the director of Clean Transportation for All at the environmental organization Sierra Club, said of the new fuel economy standards: “Gutting the CAFE program will make cars burn more gas and American families burn more cash. The current standards save drivers thousands of dollars each year by requiring manufacturers to produce more fuel-efficient cars. Weakening them further hurts our economic well-being at a time when families are already burdened by rising costs. This rollback would move the auto industry backwards, keeping polluting cars on our roads for years to come and threatening the health of millions of Americans, particularly children and the elderly.”

What Happens Next

The administration’s plan for loosening CAFE standards has not been finalized, and the Department of Transportation has said a 45-day public comment period will commence after it is published in the Federal Register.