With the election over, people are wondering: What does a Trump presidency do for the U.S. truck market? Should they delay buying a new truck?
These questions come from various emails I’ve received over the past few days. A U.S. presidential election does cause a lot of speculation on the future, especially when the incoming Republican party has vastly different goals and objectives from the outgoing Democratic party.
Let’s break this down into several parts to give a full picture of what you can expect.
Where the U.S. truck market is today
Before we discuss the changes, let’s first understand where we are in terms of past laws that have taken effect.
In today’s truck market, we have seen laws affect the market in three key ways: vehicle size, powertrain and cost — thanks in part to tax loopholes.
Vehicle size relates to its overall footprint. This change occurred when then-President Obama’s administration finalized new Corporate Average Fuel Economy (CAFE) rules pushing fuel economy requirements to new heights and changing the way vehicles were judged to meet that criteria. These new rules built on former President George Bush’s CAFE rules.
The new way of measuring vehicles changed to footprint, which is the wheelbase and track width. Basically, this is between the tire centerlines. These vehicles had lower fuel economy targets than smaller vehicles.
What happened? Vehicles got larger. It is simply much easier to hit a fuel economy target in a larger vehicle than squeezing out small gains in a smaller vehicles.
We also have seen many changes to powertrains over the years with most automakers providing some sort of electrification in terms of full battery electric or a hybrid powertrain. Also, new small-displacement turbocharged transmissions mated to 8- to 10-speed transmissions have become the heart of the market.
While some brands still offer a V-8 engine, with cylinder deactivation to make them into 4 cylinders or less when driving, the availability of those engines in trucks has become more limited, and sometimes they are the up-charge engine over a base turbo or a V-6 engine.
The thinking is if your vehicle is more fuel efficient, it will use less gas and thus burn less carbon vs. other less efficient vehicles causing less CO2 into the earth’s atmosphere.
The third change is to luxury models and the price of trucks. Simply put, high-end models of trucks and SUVs have gotten more expensive with new truck average transaction price of $65,713 in July, 2024 according to COX automotive study.
There are two main reasons for this. First, the consumer has changed, and we are seeing more wealthy buyers who want the luxury features. Second, section 179 now allows for the full deduction of a vehicle with a Gross Vehicle Weight Rating (GVWR) more than 6,000 pounds in the first year up to $1.2 million in equipment purchases.
This section 179 often called the “Hummer Tax Loophole” was meant to help small businesses buy new equipment to grow their business.
It can now be used with a variety of businesses as long as you buy a vehicle that’s heavy enough (full-size truck or SUV) and use it primarily for work (farmers, ranchers, independent trades, etc…).
This has helped indirectly raise the prices since it is just good tax practice, for some businesses, to spend more on a vehicle and pay less in taxes.
It isn’t so uncommon to see farmers and ranchers, for example, driving more luxury versions of full-size trucks.
Plus, dealerships have told me businesses are spending a bit more on vehicles since they want employees to have power windows, locks and up-level infotainment options, which can include fleet-management software to help save the company money in the long run.
What can a Trump presidency change in the U.S. truck market?
Now that we understand where we are, it begs the question: What can a Trump presidency change in the U.S. truck market?
First, let’s look back to the prior administration. They proposed rolling back some of the Obama-era CAFE rules with just a modest improvement in fuel economy. The Safer Affordable Fuel Efficient (SAFE) vehicles rule was finalized on May 31, 2020, in the final months of Trump’s first term in office.
The SAFE CAFE rules, jointly developed with the National Highway Traffic Safety Administration (NHTSA) and the EPA, sought to slow down the adoption of new engines and only slightly encourage improvements in fuel economy.
On April 1, 2022, the Biden administration made major changes to the CAFE rules basically reversing them to focus on improvements to fuel economy.
Automakers, meanwhile, followed their own plans.
For example, for the 2022 Toyota Tundra and Sequoia, Toyota killed off the V-8 engines and moved to the small displacement turbocharged 3.4-liter engine. The new 3.4-liter V-6 twin-turbocharged engine was developed during the Trump years.
Stellantis followed a few years later when it brought out the 3.0-liter Hurricane inline-6 turbocharged engine in the Jeep Wagoneer and Jeep Grand Wagoneer. It has then moved forward with plans to use that engine in the 2025 Ram 1500.
Overall, Stellantis plans to kill off all of its V-8 engines throughout its lineup expect for heavy-duty trucks, which fall under other emissions rules.
This leaves Ford and General Motors with offering V-8 engines in some trucks and SUVs.
Ford has the 5.0-liter V-8 and a 5.2-liter supercharged V-8 in the Raptor R. The Raptor R is $30,000 more than the Raptor with the 3.5-liter V-6, so you pay a big price for the bigger engine.
The 5.0-liter V-8 is used in most trims of the F-150 except for the top trim King Ranch and Platinum trims.
It isn’t used in any other SUVs like the Ford Expedition. Those have some versions of the EcoBoost family of engines, which are small displacement turbocharged engines.
GM uses the 5.3-liter V-8 and the 6.2-liter V-8 in its full-size trucks and SUVs like the Tahoe and Yukon. It also offers a 2.7-liter turbocharged engine and 3.0-liter inline-6 Duramax diesel.
The GM V-8 engines have a new dynamic fuel management system letting it run on as little as 1-cylinder to help meet emissions standards.
Future CAFE rules?
What about future CAFE rules if, say, President Trump is succeeded by another Republican with the same mindset?
There is a much greater likelihood of a change if that occurs.
Automakers develop plans based on a decade or more into the future, and it takes years to develop a new engine and bring it to market. Plus there’s millions of dollars in research and development costs.
With the U.S. being the world’s second-largest market, the CAFE rules do have some sway on future plans. The challenge, of course, is developing powertrains for individual markets to meet varying global emissions requirements.
We have seen over the past decade, automakers become very reluctant to do that. Instead, they have been focusing on the “commonality of parts” approach to speed up production, reduce quality issues and cut expenses.
For example, simple things like door latches are now used throughout an automaker’s global lineup. Powertrains are the same way.
The other issue is even if President Trump decides to rollback some of Biden’s more strident CAFE rules, automakers have already invested billions in meeting future goals on a global scale. Plus, automakers already meet or exceed the current CAFE rules.
What about manufacturing?
Another big question deals with manufacturing of vehicles. Many consumers really do care where their truck or SUV is built, often preferring a U.S.-built vehicle.
First, there has been an increase in U.S. automotive plants in operation in the past few years.
For example, automakers have either reopened plants — like with Rivian reopening a shuttered Mitsubishi plant in Normal, Illinois — or planning to reopen like the Belvidere, Illinois, where Stellantis is planning to produce a new Ram midsize truck.
Then, there are also the trillions that have been spent building new electric vehicle factories, battery plants and investing in U.S. manufacturing of semiconductor chips.
Currently, the U.S. automotive market has recovered well from the COVID 19 pandemic, and we are seeing consistent employment numbers according to the latest U.S. Government data.
Now there are plans, especially by Stellantis, to expand production to Mexico for the 2025 Ram 1500. Toyota has already moved all its Tacoma production to Mexico, and GM announced it will change a Canadian plant from EVs to full-size trucks.
What gives, then, and why aren’t those plants in the U.S.? They are part of the old NAFTA agreement that the Trump administration updated and renamed the United States-Mexico-Canada Agreement (USMCA) on July 1, 2020.
This allows automakers to build trucks outside the U.S. and not be subject to the Chicken Tax tariff.
Those automakers take advantage of the much lower labor costs, especially in Mexico with workers making one-tenth the income of U.S. union auto workers.
With the UAW winning large pay raises from the 2023 strike, it isn’t hard to imagine more automotive production heading to Mexico.
U.S. automakers have, though, publicly announced millions in investments in U.S. facilities over the past few years.
About those tariffs
One of the campaign pledges Donald Trump ran on was the idea of leveraging tariffs on imported goods like foreign-built vehicles.
This is an area of focus with regards to China and its state-sponsored electric vehicle companies.
Those companies receive federal money to offset costs which allows them to sell electric vehicles at a much lower price point.
Current President Biden has already passed a 100% tariff on Chinese companies importing vehicles. A Trump Administration would likely just keep that in place.
They would also keep in place the Chicken Tax placing a 25% tariff on imported light-duty trucks which went into effect in 1964 and was signed into law by then President Lyndon B. Johnson.
An example of this tax is found on the new Ineos Grenadier Quartermaster. The Grenadier Wagon (aka SUV) and Quartermaster pickup are the essentially the same vehicle, but the SUV costs $71,500, and the truck starts at $88,500 largely due to the 25% tariff applying only to the truck.
Gas prices, interest rates, new vehicle prices
The more important change coming for new truck consumers is going to be in the form of lower gas prices and interest rates and cheaper vehicles.
For gas prices, it comes down to oil production, refinery space and business practices by the oil companies.
Oil production and exports just set a new monthly high last month and government data shows the amount of oil produced has increased over the years.
Since gas is a commodity, we should see further decreases in fuel prices like we have seen for the past year with refineries producing more supply.
Right now, AAA says national gas prices are averaging $3.10 a gallon. This is down anywhere from $0.60 to $0.50 cents from just a year ago.
U.S. Government data shows the how much gas prices have jumped since the early 2000s and have changed dramatically in the past few years.
Experts expect gas prices to continue to fall especially with OPEC, the coalition of Middle East countries that has a large effect on prices, says it will increase oil production soon.
These changes in oil production will take months to take effect. I don’t think we will see $1 gas again, and if we do, it won’t be for long with oil companies reacting to such a low number by shuttering plants and constricting supply.
It seems like a figure of around $2-3 a gallon, with inflation factored in, keeps consumers happy and oil companies happy.
Next, interest rates. These will be dropping throughout 2025 and may return to pre-pandemic levels. The Federal Reserve, the non-political group that sets the bank interest rate, has said as much in the past few months and economic markets are already planning for rate decreases. This will be down from the historic levels used by the Federal Reserve to rein in inflation.
This means that you could wait to buy a new truck in order to finance with a lower rate or you buy now and refinance later. Rates will be lower; that is certain.
Another thing that is likely to happen is prices will start to fall, and more incentives will be offered on trucks and SUVs.
This is going to be due to a few factors like more supply of vehicles as the supply chain finally gets fully straightened out, more competition in the marketplace with all brands updating their trucks in the past few years, interest rate drops allowing for cheaper payments, etc.
The used truck market should also start to see an influx of vehicles from the COVID years starting to be traded in. Most consumers keep a car for three to four years and a truck for five to seven years. Heading into 2025, going on five years since the COVID-19 pandemic really went into full swing, consumers should be ready for a new vehicle.
This will definitely have an impact on car shopping.
The bottom line
What does this all mean? It means you will have a better interest rate, lower price and lower fueling costs if you wait a year.
It doesn’t mean more V-8 engines, nor will there be new U.S. truck plants from Ford, GM or Stellantis.
And electric vehicles will start be a part of the automotive landscape. We should also see more electrification coming to trucks in the form of plug-in hybrid setups and hybrids due to consumer demand as well as emissions rules.
Then, in four years, things could change again.
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