In William Wymark Jacobs’ 1902 short horror story The Monkey’s Paw, the cursed paw grants three wishes, but in unexpected and malign ways. For the US automotive industry, President Donald Trump has had a rather similar effect.
As soon as he was elected, carmakers started urging Mr Trump to rethink President Barack Obama’s planned vehicle fuel economy and emissions standards for 2022-25. Last week, the Trump administration set out its proposals for fulfilling that request: it intended to abandon the steady tightening of the standards envisaged by Mr Obama, and instead freeze them at their 2020 levels for the six years 2021-26.
Far from celebrating the success of its lobbying campaign, though, the US automotive industry gave the administration’s plans a distinctly tepid response, suggesting that the proposals should be just a starting point for further negotiations. Having egged on Mr Trump, the industry is now trying to rein him in.
Car companies argue that they had legitimate grounds for complaint about the Obama administration’s plans. The standards were set as the result of a 2011 agreement between the administration and 13 leading carmakers, which included a commitment to a “midterm evaluation” in 2017. After Mr Trump’s unexpected election victory, the Environmental Protection Agency hurried that evaluation through in the dying days of the Obama administration, concluding swiftly that the existing plans were just fine.
Meanwhile, the slump in oil prices that began in 2014 was making it harder for manufacturers to meet the standards. Compliance is based on the average performance for the cars produced by each manufacturer, and cheaper petrol blunted the incentive for consumers to buy more fuel-efficient vehicles. Having exceeded the fuel economy standards by comfortable margins in 2012-15, the industry fell short in 2016 and 2017.
Worried that they were already falling behind, and aggrieved at the abrupt way the Obama administration had reaffirmed its plans, carmakers sounded the alarm. A 2016 study had suggested that the standards could cost the industry about 1m jobs, and although other researchers suggested that estimate was tendentious at best, it became a key talking point for manufacturers, highlighted by chief executives in a meeting with Mr Trump soon after his inauguration.
Mr Trump did not need much prompting. A defining characteristic of his administration has been his urge to undo any decision taken by Mr Obama, and creating manufacturing jobs is one of his signature promises. The opportunity to do both at once was too good to miss.
The problem for the industry, however, is that the standards are not entirely in the federal government’s gift. Under the 1970 Clean Air Act, California has the authority to set its own emissions limits, which are closely linked to fuel economy standards, subject to approval from the EPA. California has made it clear that it wants to retain the Obama-era regulations, and nineteen other states are following its lead. Having to make two radically different ranges of vehicles for two different US markets would be disastrous for the industry, so California and the federal government must somehow be brought into alignment.
The Trump administration has proposed to tackle that obstacle by bulldozing it, withdrawing EPA approval for California to set its own standards. But the legality of such a move has never been tested, and the administration’s plans threaten a courtroom battle that could drag on for years, overshadowing the industry well into the next decade. In persuading Mr Trump to ease the pressure they faced from the standards, carmakers have exchanged one set of problems for another.
The clock is ticking, though. Model year 2021 vehicles, which go on sale in the autumn of 2020, are the first for which the new standards would apply, and for those the regulations need to be finalised by April 2019.
In The Monkey’s Paw, the final wish is used to avert a terrible outcome. The US automotive industry similarly has to work to rescue an acceptable solution from a mess that it has itself helped to create.
