Trump temporarily expands access to tax-free red-dyed diesel. Will it lower costs?

President Trump's new executive order allowing the use of red-dyed diesel on highways is aimed at lowering costs for truckers and farmers grappling with diesel prices that remain near record highs. But experts say they are skeptical that the order could deliver sweeping savings.

Mr. Trump announced the executive order on Tuesday during a midterm rally in Nebraska, saying the move will "officially waive the off-road requirement and allow anyone to purchase tax-free red-dye diesel for any reason." Red-dyed diesel is exempt from the federal tax of 24.4 cents a gallon that applies to regular diesel used to fuel trucks and other on-road vehicles.

The EO comes as diesel prices remain high, although they've eased slightly after reaching a record high last month of $6.53 a gallon. High diesel prices are placing financial strains on the nation's transportation, construction and agricultural industries, which rely heavily on the fuel to move goods.

The fuel is dyed red because it allows state law enforcement to easily spot it if drivers are using it on roads and highways in an effort to skirt taxes. Violators may face large fines or penalties, including tax evasion.

Instead, it defers the federal excise tax for the remainder of 2026 and directs the Treasury secretary to explore ways to eliminate the requirement to pay the taxes, according to the White House. That means drivers could potentially be on the hook for a payment down the road, experts said.

"Whether anyone who makes the switch to dyed diesel suddenly gets a tax bill is the most unanswered question I have," De Haan said in a post on X.

According to a White House fact sheet on the executive order, drivers who rely on diesel could save more than $100 each time they fill up.

But if some states don't waive their bans, it could lead to a "convoluted patchwork" of enforcement, which may ultimately deter trucks that need to cross state lines from using red-dyed diesel, De Haan added.

The impact on farmers will also be muted, given that they already get tax-free diesel in most states, De Haan noted.

The EO will allow farmers to use red-dyed diesel in personal vehicles, but it will yield only minimal savings, he added. "I don't think that any farmer is going to be jumping for joy at the prospect of saving, you know, 50 or 60 cents a gallon on their personal vehicle."

Experts noted that the EO doesn't address the lack of diesel supply, the key issue keeping prices elevated.

In theory, the EO should still put downward pressure on diesel prices; however, swings in the diesel market could blunt progress toward lower prices, Kloza added.