President Trump announced plans to suspend the 18-cent federal gasoline tax as fuel prices surge past $4.52 per gallon, driven by escalating tensions with Iran and a faltering ceasefire agreement the president says is on life support.
Congressional Action Required for Tax Relief
Trump told CBS News on Monday he would waive the tax that generates $2.5 billion annually for highway infrastructure until prices stabilize. The president lacks constitutional authority to eliminate federal taxes unilaterally, requiring congressional approval for the suspension. Senator Josh Hawley, a Missouri Republican and key Trump ally, pledged to introduce legislation immediately to authorize the tax cut. Arizona Democrat Mark Kelly proposed similar legislation in March to suspend the levy through October.
Rachel Ziemba, adjunct senior fellow at the Center for a New American Security, told reporters she expects the measure to pass despite potential procedural delays. The proposal signals Trump does not anticipate quick resolution to supply disruptions driving prices higher. Multiple states including Indiana, Kentucky, and Georgia already moved to cut their own fuel taxes, providing regional relief at the pump ahead of federal action.
War Drives Oil Markets to Three-Year Highs
Gasoline prices climbed steadily since the United States and Israel launched military strikes against Iran on February 28. Regular unleaded averaged $2.98 per gallon when operations began, according to the American Automobile Association’s daily tracking data. News of the deteriorating ceasefire sent crude oil soaring Monday. Brent crude futures jumped $3.17 to $104.46 per barrel, while West Texas Intermediate crude rose $2.90 to $98.32. Both benchmarks briefly topped $105 and $100 respectively during trading sessions.
Major oil companies saw stock prices surge on Wall Street. Exxon gained 3.1 percent in midday trading, while BP rose 2 percent, Shell climbed 1.6 percent, and Chevron added 1.7 percent. The aviation industry faces mounting pressure from sustained fuel cost increases. Spirit Airlines ceased operations after 34 years, citing geopolitical events and massive fuel price increases in court filings. United Airlines raised fares 20 percent in April due to jet fuel costs.
Economic Impact Spreads Across Industries
Trump dismissed questions about potential airline bailouts, stating the industry is performing adequately despite Spirit’s collapse and United’s fare increases. The proposed tax suspension would provide immediate relief to American consumers facing the highest pump prices since 2022. Regional differences in total gasoline taxes mean the impact will vary significantly across states that maintained or reduced their own levies alongside the federal cut.