Will Trump Car, Auto Parts Tariffs Mean a Car Crash with Wheels Coming Off?

Trump team urges oil, biofuel sectors to forge biofuel policy deal

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March 27, 2025 07:44 AM

Updates: Policy/News/Markets, March 27, 2025

— Trump slaps 25% tariff on foreign-made cars: “Build in the U.S. or pay the price.” In a major shakeup for the auto industry, President Trump announced Wednesday a sweeping 25% tariff on all cars and light trucks not built within the United States. The move, revealed during a press conference from the Oval Office, marks a bold escalation in the administration’s ongoing push to revive domestic manufacturing. “We’ll effectively be charging a 25% tariff, but if you build your car in the United States, there is no tariff,” Trump told reporters. “What that means is a lot of foreign car companies are going to be in great shape because they’ve already built their plant, but their plants are underutilized, so they’ll be able to expand them inexpensively and quickly.” Link to fact sheet. Link to proclamation.

Section 232 Authority being used for tariffs. The auto tariffs are being put in place via Section 232 of U.S. law and the proclamation makes references to a Section 232 investigation that was conducted during the first Trump administration.

Timing: The U.S. will start collecting the auto tariffs on April 3, Trump said, the day after he is slated to announce a broader slate of trade actions. The proclamation from Trump says the tariff on parts will start on a date that will be specified in a Federal Register notice but no later than May 3, even though some officials said they would start April 3.

Of note: USMCA-compliant automobile parts (such as engines, transmissions and electrical components) will remain tariff-free until Commerce Secretary Howard Lutnick, in consultation with U.S. Customs and Border Protection, establishes a process to apply tariffs to their non-U.S. content, according to the White House. The 25% tariff will be applied to imported passenger vehicles and light trucks, as well as key automobile parts, with processes to expand tariffs on additional parts if necessary, according to the White House.

Why it matters. The auto industry, already under pressure from global supply chain issues, rising material costs, and a shift toward electric vehicles, now faces fresh challenges. Industry experts warn that the new tariffs are likely to lead to higher sticker prices for American consumers. A study by the U.S. International Trade Commission earlier this year found that a 25% blanket tariff on auto imports would reduce those imports by about 74% — but also increase average vehicle prices by 5%. Nearly 45% of light vehicles sold in the U.S. are imported, according to S&P Global Mobility. Automakers relying heavily on foreign production now face tough decisions about how — and where — to build.

Market impact: Ford and GM shares slid earlier in the day in anticipation of the tariff talk. GM shares closed down 3.1%, but Ford stock rallied late to close up 1 cent. Tesla shares were 0.4% higher and Stellantis shares were off 4.3%, respectively. Tesla is the least exposed to tariffs, based on domestic production. It assembles all the cars it sells in the U.S. within the country. However, “Important to note that Tesla is NOT unscathed here. The tariff impact on Tesla is still significant,” Elon Musk posted on X in reply to another user. The figure for Ford is about 80%. For GM and Stellantis, the number is about 55%. South Korea’s Hyundai could be the hardest hit. Although the carmaker and its affiliate Kia have plants in Alabama and Georgia — and announced a $21 billion US expansion plan this week — it shipped more than a million vehicles to the U.S. last year, accounting for more than half of its sales in the country, according to figures from Global Data. Toyota Motor Corp., the world’s biggest automaker, exports about half of what it sells in the U.S. “A lot of foreign car companies are going to be in great shape because they’ve already built their plant, but their plants are underutilized, so they’ll be able to expand them inexpensively and quickly,” Trump said. “Others will come into our country and build, and they’re already looking for sites.”

President Trump’s aides said tariffs would generate $100 billion in annual revenue for the government. That implies tariffs on $400 billion of car sales.

The bigger picture. This announcement comes after months of on-again, off-again tariff threats targeting key trade partners like Canada and Mexico. The administration’s global steel and aluminum tariffs have already pushed up input costs for U.S. carmakers. Now, with the threat of automotive tariffs turned into policy, the industry faces yet another layer of uncertainty. Trump framed the decision as a win for American jobs and a nudge to automakers that have delayed investing in U.S. production. Whether that bet pays off — or simply drives prices higher for consumers — remains to be seen.

Facts and figures. More than 7 million cars in 2024 were imported to the U.S. What’s more, 50% or more of the parts on many popular models assembled in the U.S. come from Canada and Mexico.

U.S. Dept. of Commerce International Trade Admin.

— Trump unveils ‘lenient’ reciprocal tariff plan, set to hit all nations. President Donald Trump is moving forward with a sweeping new tariff plan targeting every nation, but he insists the levies will be more forgiving than critics might expect. “We’re going to make it all countries, and we’re going to make it very lenient,” Trump said from the Oval Office on Wednesday. “I think people are going to be very surprised.”

The initiative, slated for rollout on April 2, centers on reciprocal tariffs — a policy approach in which the U.S. will match the duties that other nations impose on American goods. Trump framed the move as a long-overdue correction to what he sees as decades of unfair trade treatment.

“We have not been treated nicely by other countries,” Trump noted, “but we’re going to be nice. So, I think people will be pleasantly surprised.”

Of note: While the tariffs will apply globally, Trump emphasized they would often be “less than the tariff that they’ve been charging us.” He described the rollout as firm but fair — part of his continued push to rebalance trade relationships in favor of U.S. interests.

Trump warned today that he plans to impose additional “large scale tariffs” on the European Union and Canada if they collaborate to do “economic harm” to the U.S. European Commission President Ursula von der Leyen condemned the tariffs and Canadian Prime Minister Mark Carney called them a “direct attack” and a violation of the United States-Mexico-Canada Agreement. Carney said he expects to talk with Trump over his promised tariffs on auto imports.

Japan reacts. Japan, which lobbied Trump hard with promises to invest big in the United States, called the tariffs “extremely regrettable.” It is petitioning for an exception, noting that its automakers are big employers in the United States.

On top of that there are still questions about what will happen with pharmaceuticals, chips, lumber and copper.

— Trump floats tariff cut for China to close TikTok deal. President Donald Trump signaled he’s open to reducing tariffs on China in exchange for a deal to sell TikTok’s U.S. operations to an American company — suggesting economic leverage could be a bargaining chip to sway Beijing. “Every point in tariffs is worth more than TikTok,” Trump said Wednesday from the Oval Office. “So in order to get China to do [it], maybe I’d give them a reduction in tariffs, as an example.”

His comments came during an event announcing a new 25% tariff on foreign auto imports, part of his broader “reciprocal tariff” initiative, which aims to penalize countries that impose higher tariffs on U.S. goods. Currently, Chinese goods are already subject to 20% tariffs under Trump-era measures.

While expressing optimism, Trump said a preliminary agreement on TikTok could be reached by next week. But he also signaled flexibility if negotiations stall. “We’re going to have a form of a deal, but if it’s not finished, it’s not a big deal. We’ll just extend it,” he told reporters.

The potential tariff rollback adds a new dimension to the ongoing battle over TikTok’s U.S. future — and signals Trump’s willingness to use trade tools for geopolitical leverage.

— EU braces for potential 20% tariffs from Trump administration. EU Trade Commissioner Maros Sefcovic expects the U.S. to impose tariffs of around 20% on the bloc as early as next week, according to the Financial Times, citing sources familiar with the matter. Sefcovic reportedly told EU officials that while Washington’s final decision remains unclear, the tariffs would target all 27 EU member states equally. In a meeting with top U.S. officials — including Commerce Secretary Howard Lutnick, Trade Representative Jamieson Greer, and NEC Director Kevin Hassett — Sefcovic warned that such tariffs would be “devastating” for the EU.

— U.S. Trade Rep Greer voices trade concerns in call with China’s He. U.S. Trade Representative Jamieson Greer and China’s Vice Premier He Lifeng held their first video conference since President Trump’s second term began, engaging in frank discussions about trade policies. Greer condemned China’s “unfair and anticompetitive” practices, while He objected to U.S. tariffs, particularly those tied to fentanyl-related issues. The meeting preceded an April 2 announcement of new reciprocal tariffs by the U.S., which follow a 20% levy imposed in January on Chinese imports. China has responded with targeted tariffs of up to 15% on key U.S. exports. Greer expressed “serious concerns” over China’s trade policies and practices, according to a statement (link). Both sides agreed on the importance of continued communication. Despite rising tensions, both sides committed to ongoing dialogue to ease economic friction.

— GM and Ford execs to discuss tariffs with White House: Detroit Free Press. Ford Chair Bill Ford and General Motors CEO Mary Barra are engaging with Trump administration officials this week to discuss the impact of tariffs on their companies, the Detroit Free Press reports, citing four unnamed sources familiar with the matter. According to the report, Bill Ford is traveling to Washington, D.C., for meetings, while GM’s Mary Barra is also set to speak with administration officials, though not necessarily in person.

— Justice Dept. launches task force to cut red tape. The Justice Department is forming a new Anticompetitive Regulations Task Force to ramp up efforts against regulations seen as stifling free market competition. Led by assistant attorney general Gail Slater, the initiative aims to target both government-imposed and private-sector barriers across key sectors like housing, food, energy, and healthcare.

This move aligns with the Trump administration’s broader deregulatory push, echoing recent executive orders to reduce bureaucratic burdens on businesses. Slater, a former adviser to Vice President JD Vance, emphasized that while antitrust enforcement remains robust, regulation must be approached with restraint: “Antitrust enforcement is a scalpel,” she said, “and regulation is often a sledgehammer.”

— Court reinstates Alaska’s ANWR oil and gas leases. A federal judge overturned the Biden administration’s cancellation of seven oil and gas leases in the Arctic National Wildlife Refuge (ANWR). U.S. District Judge Sharon Gleason ruled that only courts — not the executive branch — have the authority to revoke the leases, referencing a 2017 tax law. The decision supports a Trump-era executive order reinstating the leases and was welcomed by Alaska Governor Mike Dunleavy.

— CBO warns of potential U.S. debt default by August. The Congressional Budget Office (CBO) has cautioned that the federal government may exhaust its ability to pay bills on time by August or September 2025 unless Congress raises or suspends the $36.1 trillion debt limit. The Treasury Department has been using extraordinary accounting measures since January 21 to avoid breaching the ceiling but has not provided specific guidance on when these measures will run out.

House Republicans aim to tie a debt-limit increase to extending President Trump’s 2017 tax cuts, while Senate Republicans consider addressing the issue through reconciliation without Democratic support.

Timeline varies. Other estimates, including from the Bipartisan Policy Center, suggest the “X-date” could arrive as early as mid-July or as late as October, depending on tax revenue and fiscal obligations.

Failure to act before the X-date would lead to defaulting on some obligations, which could disrupt financial markets and harm the economy. Treasury Secretary Scott Bessent has pledged to avoid default during his tenure.

— Treasury scales back corporate transparency act reporting rules. The Treasury Department formally published a FinCEN interim final rule (link) removing the requirement for U.S. companies and individuals to report beneficial ownership information (BOI) under the Corporate Transparency Act. The rule, now effective, limits reporting to foreign entities only. Treasury Secretary Scott Bessent said the move aims to ease regulatory burdens on American taxpayers and small businesses. This follows Treasury’s earlier suspension of the Act’s enforcement on March 2 (link). FinCEN is accepting public comments and expects to finalize the rule later this year.

— Canada’s PM Carney pledges $2 billion to shield auto sector from U.S. tariff threats. Canadian Liberal Leader Mark Carney unveiled a $2-billion fund aimed at protecting Canada’s auto sector from potential U.S. tariffs under President Donald Trump. Speaking in Windsor, Ontario, Carney emphasized building an “all-in-Canada” manufacturing network to reduce reliance on cross-border car part production. Framed by the Ambassador Bridge — a vital trade link between Canada and the U.S. — Carney warned that Trump’s trade policies, including a 25% tariff on Canadian steel, threaten the foundation of Canada/U.S. economic ties. He pledged to prioritize government procurement of Canadian-built vehicles and bolster domestic supply chains, aiming to safeguard jobs, upskill workers, and attract industry investment. Industry leaders, including Flavio Volpe of the Automotive Parts Manufacturers’ Association, welcomed the move, citing the need to adapt Canada’s strategy in the face of a possible breakdown of tariff-free trade with the U.S.

— Industry groups warn proposed fees on Chinese ships could hurt U.S. economy. More than 300 industry associations urged the U.S. Trade Representative (USTR) to drop proposed fees on Chinese ships, warning they would harm American businesses, consumers, and port communities. In a letter sent to USTR Ambassador Jamieson Greer, the groups argued that while they support scrutiny of China’s maritime dominance, the proposed charges — up to $1.5 million per ship entry — would drive up shipping costs by 25%, add $30 billion in annual expenses, and worsen the U.S. trade deficit. The USTR’s proposal stems from a Section 301 investigation into China’s dominance in the maritime, logistics, and shipbuilding sectors. It cites concerns over China’s market control, including 95% of global shipping container production and more than 50% of shipbuilding output.

The letter, timed with public hearings this week, warned that the fees would reduce ocean carrier service to U.S. ports — especially smaller ones — shifting traffic to Canada and Mexico, disrupting supply chains, and increasing congestion. Critics also said the proposal overlooks the limited capacity of the U.S. shipbuilding industry, which cannot be revitalized within the proposed timeline.

— SSA eases filing rule after backlash. The Social Security Administration (SSA) has reversed its decision to require all benefit applicants to file claims in person or online. Now, only those applying for retirement, survivors, or family benefits must follow this rule starting April 14. Applicants for disability benefits, Supplemental Security Income, and Medicare can still file by phone. This change comes as the SSA plans to cut 7,000 jobs — about 12% of its workforce — and close local offices, potentially making access to services more difficult.

PERSONNEL

— Janet Yellen joins Pimco advisory board. Former Treasury Secretary and Federal Reserve Chair Janet Yellen will join the advisory board of bond giant Pimco, CNBC reports. The board, which convenes several times a year, includes other top economic and financial figures. According to Pimco, members provide insights on global economic, political, and strategic developments relevant to financial markets.

— EPA nominee vows clarity on wetlands, PFAS rules amid regulatory shift. President Trump’s nominee to lead the EPA’s Office of Water, Jessica Kramer, told senators Wednesday that a forthcoming rulemaking will clarify key terms from the Supreme Court’s 2023 Sackett v. EPA decision. The rule is expected to define what constitutes “relatively permanent” wetlands with a “continuous surface connection” to navigable waters — criteria the Court set for federal protection under the Clean Water Act but left vague. Kramer said the update should help property owners identify whether wetlands on their land qualify as Waters of the U.S. (WOTUS). She also noted the agency will reexamine if ditches should be covered and confirmed PFAS regulations remain a moving target.

— Senate confirms Trump-era economist as Treasury’s No. 2. Michael Faulkender, a former Trump administration official who helped shape pandemic relief efforts, was confirmed by the Senate on Wednesday as deputy Treasury secretary in a 53-43 vote. He will serve under Treasury Secretary Scott Bessent, overseeing domestic finance, international affairs, and financial crime policy. Faulkender previously served as assistant secretary of economic policy during Trump’s first term.

FINANCIAL MARKETS

— Equities today: Asian and European stock markets were mixed in quieter overnight trading. U.S. stock indexes are pointed to mixed openings. Some European stocks slid after President Donald Trump pushed ahead with tariffs on automakers and threatened more sweeping trade levies. Mercedes and Porsche alone could see tariffs wipe out a combined $3.7 billion in operating profits, Bloomberg calculates. U.S. stock futures were little changed after the market decline Wednesday. General Motors is down more than 6% in premarket trading. In Asia, Japan -0.6%. Hong Kong +0.4%. China +0.2%. India +0.4%. In Europe, at midday, London -0.5%. Paris -0.3%. Frankfurt -0.6%.

Equities yesterday:

The following two charts show the uncertainty and volatility largely caused from tariff announcements and Washington DC issues:

— Two major banks turn bearish on U.S. markets. HSBC has downgraded its rating on U.S. stocks, citing declining investor confidence. Meanwhile, Barclays lowered its year-end target for the S&P 500 to 5,900 — the most pessimistic forecast among major banks.

— Gold hits new high as trade tensions fuel safe-haven surge. Gold futures soared past $3,080 an ounce in New York this morning, setting another record as investors flee to safer assets amid President Trump’s intensifying trade war threats. Analysts say the rally is just beginning. A new Bank of America report forecasts gold could climb over 10% in the next year to $3,350, with a potential peak of $3,500. Key drivers include increased demand from Chinese insurers — now allowed to invest in gold — and surging interest from retail investors through gold-backed ETFs, which are outperforming the S&P 500. Central banks may also boost their gold reserves from 10% to 30%, according to BofA strategist Michael Widmer, potentially reshaping global monetary reserves. As countries cool on the U.S. dollar and explore alternatives due to rising geopolitical friction with the Trump administration, gold could gain further momentum. Widmer notes that “uncertainty around Trump administration trade policies could continue to push the USD lower,” providing additional support to gold prices.

— Nvidia hit by China chip ban fears. Nvidia shares dropped nearly 6% on Wednesday after reports emerged that Beijing’s new energy efficiency rules could block the company’s H20 chip from the Chinese market. The move threatens Nvidia’s foothold in China, a key segment of its global business.

— The Congressional Budget Office (CBO) will release its long-term budget projections today at 2 p.m. ET. This report, titled The Long-Term Budget Outlook: 2025 to 2055, will provide projections for the nation’s fiscal and economic future over the next three decades.

— St. Louis Fed President sounds caution on tariff impact. In a candid speech delivered Wednesday at a business event in Paducah, Kentucky, St. Louis Federal Reserve President Alberto Musalem warned that proposed tariff hikes — particularly those linked to Trump-era trade policies — could pose a more persistent threat to inflation than many anticipate. “I would be wary of assuming that the impact of tariff increases on inflation will be entirely temporary,” Musalem said. “I would be especially vigilant about indirect, second-round effects on inflation.”

While the immediate, direct effect of tariffs may amount to a one-time bump in prices — an estimated 0.5 percentage point increase in the personal consumption expenditures (PCE) index — the indirect effects loom larger. Fed staff research suggests that if fully implemented, the proposed tariff hikes could raise the effective U.S. tariff rate by 10%, potentially pushing PCE inflation up by as much as 1.2 percentage points.

Of note: “The indirect, second-round effects on non-imported goods and services could have a more persistent impact on underlying inflation,” Musalem emphasized.

Facts and figures. In January, PCE inflation stood at 2.5% year over year, with core PCE — excluding food and energy — at 2.6%. February’s data, due Friday, is expected to show little change, with economists forecasting headline PCE to remain at 2.5% and core PCE to tick up to 2.7%.

Musalem also flagged the potential economic cooling effects of retaliatory trade actions by other countries. While these responses could ease inflationary pressures and justify a looser monetary stance, they add another layer of complexity to policy decisions.

Distinguishing the types of inflation effects in real time is “considerably uncertain,” Musalem noted. Despite the risks, he remains optimistic about the broader economic outlook: “My base case is for moderate U.S. growth, a healthy labor market, and inflation cooling to 2% by 2027.”

Inflation expectations remain stable in the medium and long term, but Musalem cautioned against complacency. “With inflation already above 2% in a full-employment economy, the stakes are potentially higher,” he said, especially with households and businesses still acutely aware of recent price surges. For now, he doesn’t foresee a stagflation scenario, but his inflation outlook has nudged upward in recent months.

AG MARKETS

— Ag markets today:

Grains firm near session highs. Grain markets had a quiet, two-sided overnight session, but futures firmed and traded near their session highs by 7:30 a.m. ET. Corn futures hovered around unchanged, soybeans were mostly 4 cents higher, and wheat futures ranged from fractionally higher to up 4 cents, with HRS contracts leading the gains. The U.S. dollar index had dropped nearly 200 points, front-month crude oil futures were about 30 cents lower, and gold futures had climbed to a record high.
Choice beef continues to surge. Choice boxed beef prices jumped another $3.11 to $338.30 on Wednesday, while Select firmed $2.48 to $316.53. Wholesale Choice beef has surged $12.85 in three days this week and $27.53 since Feb. 21 to a record for March. The only other times Choice beef values have been higher were June 2023, June and August 2021 and the record surge in May 2020.
Cash hog index firms, pork cutout falls. The CME lean hog index is up 23 cents to $89.13 as of March 25. The pork cutout fell $1.90 to $95.65 on Wednesday, though movement stayed strong at 320.8 loads, signaling active retailer buying on weaker prices.

— Ag trade: Taiwan purchased 100,000 MT of U.S. milling wheat. South Korea bought 136,000 MT of corn – 68,000 MT optional origin and 68,000 MT to be sourced from South America or South Africa – with potential additional purchases from the tender for up to 280,000 MT. Turkey tendered to sell 50,000 MT of durum wheat. Bangladesh tendered to buy 50,000 MT of optional origin non-basmati parboiled rice.

— H&P report out this afternoon. Analysts expect USDA’s Hogs & Pigs report to show a 1.2% increase in the U.S. hog herd as of March 1. The breeding herd is expected to increase 0.2%, while the market hog inventory is anticipated to be 1.1% bigger than last year. The winter pig crop is expected to have increased 1.8% from last year. Revisions to past data are likely as first quarter slaughter ran below levels implied by the December H&P Report.

— Canada’s canola farmers say the federal government has prioritized Ontario’s electric-vehicle sector above one of Canada’s most important agricultural products as new Chinese tariffs on the crop have sent prices to their lowest levels in years, the Globe and Mail reports (link).

— Agriculture markets yesterday:

ENERGY MARKETS & POLICY

— Oil prices hold steady amid tariff concerns and supply worries. Oil prices remained stable on Thursday as markets digested newly imposed U.S. tariffs, while ongoing concerns about global supply constraints kept prices hovering near one-month highs. Brent crude futures dipped by 14 cents (0.2%) to $73.65 per barrel, and U.S. West Texas Intermediate (WTI) crude fell 11 cents (0.2%) to $69.54.

— Oil prices rose Wednesday on U.S. inventory drop and Venezuela tariff threats. Oil prices climbed on Wednesday as U.S. crude and fuel inventories declined more sharply than expected and concerns mounted over tighter global supply. Brent crude rose 77 cents (1.05%) to $73.79 per barrel, while WTI increased 65 cents (0.94%) to $69.65. The EIA reported a 3.3 million-barrel drop in U.S. crude stocks last week, far exceeding analyst forecasts. Market tension grew after the U.S. threatened 25% tariffs on countries buying Venezuelan crude, disrupting Chinese imports and raising the risk of up to 400,000 barrels per day in production shutdowns, according to Barclays. Chinese refiners are awaiting official guidance, as U.S. sanctions also tighten against Iranian oil. OPEC+ may be ramping up production to counter a potential 1.5 million-barrel-per-day loss from Iran. A Russia-Ukraine maritime and energy truce sparked speculation about rising Russian exports, which, alongside potential shifts by China and India toward Russian crude, helped cap further price gains.

— Trump team urges oil, biofuel sectors to forge biofuel policy deal. The Trump administration has asked leaders from the oil and biofuel industries to reach a consensus on U.S. biofuel policy to prevent the clashes that marred Trump’s first term, according to four sources cited by Reuters. A recent meeting brought together stakeholders including Will Hupman, VP of downstream policy at the American Petroleum Institute, who said collaboration would help the administration make policy decisions more smoothly.

One key area of alignment was increasing the renewable diesel and biodiesel mandate from 2025’s 3.35 billion gallons to potentially 4.75–5.5 billion gallons in 2026, though some favor a slower ramp-up. Conventional ethanol is expected to stay near the 15-billion-gallon level due to flat gasoline demand. No agreement was reached on handling small refinery exemptions or the future of the Clean Fuel Production Credit (45Z), with some favoring the reinstatement of the $1/gallon biodiesel credit instead.

The lack of a clear stance from the Trump team and the decision to keep talks ongoing suggest the administration does not yet have a finalized biofuel policy. Notably absent from the discussions was the issue of year-round E15 sales, which many see as key to boosting ethanol demand.

— There have been efforts to support E20 (20% ethanol) and E25 (25% ethanol) blends in various countries:

Brazil: E20 and E25 blends have been widely used since the late 1970s. Brazil has mandated ethanol blending in gasoline, with the percentage fluctuating between 18% and 27.5% since 2015.
India: The country is progressing faster than anticipated towards its E20 program, aiming for 20% ethanol blending in gasoline by 2025. As of January 2025, India’s ethanol blending had already crossed 18%, and the government is exploring options to push blending rates beyond 20%.
Canada: From a standards viewpoint, there are no barriers to E15 or higher E20-E25 blends in Canada.

United States:

Minnesota mandated E20 starting in 2015, but despite these plans, the E20 mandate has not been implemented in Minnesota. Why Minnesota hasn’t moved beyond E10, according to MN House Research Summary: Minnesota law has long required most gasoline to be blended with 10% ethanol (E10). In 2013, the law was updated to allow higher biofuel blends — like E15 or E20 — but only if the EPA approved them for all light-duty vehicles. While the EPA has approved E15, that approval applies only to vehicles from model year 2001 and newer. Because of this limited waiver, the state mandate remains at E10. Legislative attempts to shift to E15 in 2020, 2021, and 2022 failed, leaving the ethanol blend requirement unchanged.
The transition to higher ethanol blends has faced several challenges:
- Limited adoption: Even in the Midwest, where ethanol production is significant, blend rates of E20-50 have remained limited and stagnant, accounting for only 0.04 percent of total gasoline sales in Minnesota.
- Vehicle compatibility: Greenlighted by EPA for all vehicles built since 2001, consumers are legally permitted to fill up with E15 in 96% of vehicles on the road today. New for 2024, Subaru approved the use of E15 in its popular Forester model, completing the manufacturer’s multi-year shift to E15 across the board. Notably, BMW and Mini continue to approve the use of gasoline containing up to 25% ethanol (E25) in their vehicles. Still, Mercedes-Benz, Mazda, and Volvo do not specifically list E15 as an approved fuel.The light-duty internal combustion vehicles produced by those three automakers collectively make up almost 6% of total U.S. sales. About 3,200 of the more than 196,000 fuel stations sell E15 across 31 states, with potential for expansion due to government incentives. Link (This is why the RVP waiver is needed to be done legislatively. If it is law, there will be investment.)
- Warranty concerns: Some major auto manufacturers, including BMW, Chrysler, Nissan, Toyota, and Volkswagen, warned that their warranties would not cover E15-related damage, which may have contributed to hesitancy in adopting higher ethanol blends.
- Infrastructure challenges: Most fuel stations lack the necessary infrastructure to offer higher ethanol blends, including certified pumps and dedicated storage tanks
Prohibited from using E15:
- All motorcycles
- All vehicles with heavy-duty engines, such as school buses and delivery trucks
- All off-road vehicles, such as boats and snowmobiles
- All engines in off-road equipment, such as chain saws and gasoline lawn mowers
- All conventional vehicles older than model year 2001.
Research and testing: A year-long study in Minnesota concluded that E20 provided similar power and performance to 10% ethanol blended fuel throughout the calendar year. Materials compatibility tests have shown that the effects of 20% ethanol blended fuels do not present problems for current automotive or fuel dispensing equipment.
Increasing ethanol blends to E20 or E25 offers several octane and gas price advantages:

Octane benefits

Higher octane rating: Ethanol has a naturally high-octane rating of 109 RON. E20+ blends can provide greater than 102 RON when added to various base gasoline blends.
Improved engine performance: The higher octane allows for increased engine compression ratios, enabling higher torque, power, and efficiency.
Reduced need for high-octane base gasoline: With E20, the base gasoline blend only needs an octane rating of 81.3 RON to achieve a 91.0 RON for the total blend.

Gas price advantages

Lower production costs: E20 blends can reduce production costs by approximately $18.65 per barrel compared to E0 (pure gasoline).
Pricing benefits: E20 blends offer pricing benefits of about $0.91 per barrel for 91 RON gasoline.
Dilution benefits: E20 provides dilution benefits of approximately $0.60 per barrel, which can help refineries produce higher-grade gasolines more easily.
Potential consumer savings: Some studies suggest E20 could lead to retail gasoline price reductions of 2 to 5 cents per gallon.
Reduced reliance on expensive imports: Higher ethanol blends can decrease the need for costly fossil gasoline imports in the United States.

Of note: These benefits can vary based on factors such as crude oil prices, corn prices, and specific regional conditions.

TRADE POLICY

— Commentary: Why subsidies and smart investments — not tariffs — hold the real key to American industrial growth. The Trump administration’s tariffs may sound like a pro-worker, pro-manufacturing strategy — but don’t expect them to bring about a large-scale return of American factory jobs. Instead, targeted government investment is already showing results. So write Jared Bernstein & Dean Baker in an opinion item in the Wall Street Journal (link). Bernstein served as chairman of the U.S. Council of Economic Advisers (2023–25). Baker is co-founder of the Center for Economic and Policy Research. Highlights of their commentary:

Tariffs Won’t Bring Back Factory Jobs
Despite promises from Trump officials, especially VP JD Vance’s recent vow to “penalize” companies that build overseas, the evidence doesn’t support the notion that tariffs lead to reindustrialization. “Even countries with large trade surpluses have experienced declining shares of factory jobs.”

Tariffs = Economic Pain, Not Gain
Markets drop with each new tariff announcement, and consumer sentiment is down sharply. “Consumer economic sentiment recently hit a 29-month low… the largest decline since the pandemic.”

Trade Wars Backfire
Tariffs hurt both imports and exports and make U.S. goods less competitive abroad by raising the dollar’s value. “During the trade war in the first Trump term, the trade deficit... stayed around 3%, about where it is now.”

Many Imports Fuel U.S. Manufacturing
About 45% of imports are actually inputs for U.S. production. Tariffs on these goods make U.S. manufacturing more expensive. “Why have American car manufacturers pleaded with the administration not to impose tariffs on steel?”

What Does Work: Strategic Investment
The authors argue that boosting domestic production — particularly for clean energy and semiconductors — requires smart public investment, not punitive trade policy. Tax credits, subsidized loans, and grants from the Inflation Reduction Act, CHIPS Act, and Bipartisan Infrastructure Law are already fueling a manufacturing surge. “Factory construction more than doubled from 2019 to 2024 after adjusting for inflation.”

Bottom line: Tariffs might satisfy a political narrative, but they won’t drive a manufacturing boom. Real progress lies in targeted support for future-facing industries. “We know of no example in the history of advanced economies of sweeping tariffs having the positive effects the Trump team believes.”

— How Minnesota corn growers size up trade development and obstacles: Top Minnesota markets in 2024

Corn – Mexico ($156,029,098), Canada ($142,224,235), Taiwan ($213,674)
DDGS – Canada ($57,100,839), Mexico ($45,022,372), South Korea ($41,350,365)
Ethanol – Canada ($171,669,428)

Other markets of interest:

Taiwan: Consistent buyer of MN DDGS ($7,559,029 in 2024) potential for adding corn. MN Corn partners w/ MDA for Taiwan trade office.
South Korea: 3rd largest export market for MN DDGS ($41,350,365 in 2024)

New/expanded markets:

Kenya - Imposes a 50% ad-valorem import duty on corn imports from outside the East African Community (EAC); aflatoxin limit
EU - trade barriers on biotechnology
UK – limits on corn used in ethanol production
India - Currently has a ban on genetically modified corn and imposes a high tariff of 50% on corn imports. Addressing India’s ban on genetically modified corn as well as the high tariff has the potential to provide a much-needed market access opportunity for American corn exports.

CONGRESS

— Thune signals possible early budget vote amid GOP momentum. Senate Republicans are moving to fast-track a compromise budget resolution, potentially beginning votes as early as next week — a week ahead of schedule. Senate Majority Leader John Thune (R-S.D.) shared the possibility during a closed-door GOP lunch, following a productive meeting with Speaker Mike Johnson (R-La.) and Trump administration officials aimed at bridging gaps between Senate and House budget plans.

The accelerated timeline could allow the House to vote before the Easter-Passover recess. Thune’s optimism appears to stem from recent progress in negotiations, although he didn’t say so directly. Senate Budget Chair Lindsey Graham (R-S.C.) confirmed the intent to speed things up.

Thune is also leaning into the idea of tying the debt limit to reconciliation. The House has proposed a $4 trillion increase, but Senate Republicans are discussing $5 trillion to avoid revisiting the issue before the 2026 midterms — aligning with Trump’s goal to take the debt ceiling off the table swiftly.

Trump administration officials brief. The House Ways and Means Committee heard from Joint Committee on Taxation’s Tom Barthold and White House NEC Director Kevin Hassett. Hassett emphasized the benefits of Trump’s tax policies and questioned the reliability of Congressional Budget Office projections, suggesting White House forecasts were more accurate during the 2017 tax cuts debate.

— Thune pushes estate tax repeal as key GOP priority in tax package talks. Senate Majority Leader John Thune (R-S.D.) is calling for a full repeal of the estate tax as Republicans negotiate a sweeping tax cut package. Framing it as protection for family-owned farms and businesses, Thune’s push centers on eliminating the 40% levy applied to estates exceeding $13.99 million. With the current Trump-era exemption set to expire in 2025, the GOP is racing to act. “I continue to advocate for eliminating the death tax once and for all, so no farmer or rancher has to worry about whether the family farm or ranch will be able to stay in the family after they pass,” Thune said on the Senate floor Wednesday.

The estate tax affects less than 0.1% of Americans, but repeal is a long-standing Republican goal. It has gained traction with 46 Senate supporters and widespread House backing.

Eliminating the tax would cost an estimated $300 billion over a decade and would be added to an already ambitious $4.5 trillion tax blueprint. GOP leaders are weighing competing priorities, from Trump’s proposed cuts on tips and Social Security to an expanded SALT deduction.

While full repeal remains uncertain, influential voices, including Vice President JD Vance and several Trump-aligned senators, support Thune’s effort — a signal that estate tax reform could become a central battleground in the coming tax negotiations.

POLITICS & ELECTIONS

— Australian Prime Minister Anthony Albanese announced he would soon call a general election, likely for May 3. His center-left Labor government has recently introduced tax cuts to win voter support. Current opinion polls show Labor is tied with the opposition Liberal-National coalition.

FOOD & FOOD INDUSTRY

— Fresh Del Monte grabs stake in Avolio amid growing demand for seed oil alternatives. As some consumers grow wary of industrial seed oils, Fresh Del Monte Produce (FDP) is making a strategic move to align with the health-conscious shift. On Wednesday, the fruit and veggie giant announced it is acquiring a majority stake in Avolio, a Uganda-based producer of avocado oil. “Acquiring Avolio is a strategic step aligned with our long-term vision to extract greater value across our supply chain while advancing our commitment to sustainability,” said CEO Mohammad Abu-Ghazaleh.

Avocado oil has surged in popularity as an alternative to seed oils like canola, soybean, and corn. The backlash — fueled by concerns about inflammation, nutrient loss during processing, and low smoke points — has gained traction, even drawing commentary from public figures like Health & Human Services head Robert F. Kennedy Jr., a vocal seed oil critic.

Fresh Del Monte is seizing the moment. The avocado oil market is estimated at $1.2 billion, with expected annual growth of 8% to 10%, according to the company citing Fortune Business Insights. Del Monte plans to scale Avolio’s extraction technology to process 140 metric tons of avocados daily, including using unsellable fruits to reduce waste. “This move could position the company to compete in higher-margin categories,” Del Monte said, highlighting its ongoing shift toward specialty ingredients.

The broader food industry is already pivoting. Snack brands like Boulder Canyon and Good Health (owned by Utz Brands) offer avocado oil-fried chips, and fast-casual chain Sweetgreen recently launched air-fried potatoes cooked in avocado oil to distance itself from chains using seed oils.

— Brazilian firm Global Eggs acquires major U.S. Egg Producer for $1.1 billion. Global Eggs, a Brazilian holding company led by Ricardo Faria, has agreed to acquire Hillandale Farms — one of the largest U.S. egg producers — for $1.1 billion. The deal, reported by the Financial Times, marks a strategic international expansion rather than a reaction to recent market trends. The acquisition, still subject to final approvals, will double Global Eggs’ production. Faria emphasized the strong demand in the U.S. egg market, calling eggs “the fastest-growing consumer good” in supermarkets.

HPAI/BIRD FLU

— France credits bird flu vaccine as poultry return outdoors. France lifted restrictions on outdoor access for poultry following a decline in bird flu infections, which officials attribute to a successful vaccination campaign, Reuters reported. In 2023, France became the first major poultry exporter to implement a nationwide vaccination program targeting highly pathogenic avian influenza. The initiative, focused particularly on farm ducks, appears to have curbed the virus’ spread and supported the recovery of the domestic poultry sector. “France’s vaccination policy has paid off,” Agriculture Minister Annie Genevard told lawmakers, adding that the country has regained its bird flu-free status and now considers the risk level “moderate.” While some trade partners had imposed restrictions on French poultry, the domestic industry has welcomed the vaccine’s impact. As France sees success, the U.S. is evaluating similar measures amid its own outbreak, which has driven up egg prices and spread to dairy cows and farm workers. Meanwhile, Britain recently reported the world’s first case of bird flu in a sheep.

CHINA

— China freezes new deals with Li Ka-shing over Panama port sale. Beijing has directed state-owned enterprises to pause new collaborations with businesses tied to Hong Kong billionaire Li Ka-shing, sources told Bloomberg. The move follows Li’s CK Hutchison agreeing to sell two Panama ports to a BlackRock-led group — an action seen as sensitive amid U.S./China tensions. While existing partnerships remain unaffected, regulators are now scrutinizing the family’s investments both in China and abroad.

— China’s industrial profits fall to start 2025. China’s industrial profits fell 0.3% in the January-February period from the same period last year, reflecting ongoing deflationary pressures and rising trade tensions with the United States. Profits at state-owned firms rose 2.1% in the first two months, foreign firms recorded a 4.9% gain and private-sector companies posted a 9% decline.

WEATHER

— NWS outlook: Periods of excessive rainfall are forecast to slowly shift east from southern Texas today, into the upper Texas coast on Friday, and into Louisiana Friday night and Saturday morning... ...Snow and ice expected to develop over the northern Plains close to the Canadian border on Friday and then expand toward the upper Great Lakes Friday night... ...Windy and wet weather continues for the Pacific Northwest as thunderstorms could become severe across portions of the central Plains and southern Texas today.

KEY DATES IN MARCH

27: USDA Hogs & Pigs report
27: MLB Opening Day
28: Personal Consumption Expenditures Price Index
29: Last day of Ramadan
31: USDA Prospective Plantings, Grain Stocks and Rice Stocks reports | Ag Prices

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