“For many years, farm vehicles, construction equipment and other off-road vehicles have used what’s known as red-dyed diesel. You know what that is? I don’t know what the hell it is, but whatever it is, it is supposed to be very good,” Trump said at a campaign rally in Grand Island, Neb., in support of Republican Sen. Pete Ricketts. The order would “officially waive the off-road requirement and allow anyone to purchase tax-free, red-dyed diesel for any reason,” he said.
Fuel prices have soared across the country since Iran disrupted shipping through the Strait of Hormuz and attacked Middle Eastern refineries in retaliation for U.S.-Israeli strikes on Feb. 28. Average diesel prices in the U.S. hit $6.32 a gallon on Monday, according to AAA. That’s up from $3.76 a gallon before the U.S. and Israel’s war against Iran began, although below the Sept. 22 peak of $6.53 a gallon.
The spike in diesel has been magnified by Ukrainian attacks on refineries in Russia, one of the world’s top diesel exporters, and export restrictions in China. Diesel has risen 77% this year, putting it on track for the largest year-on-year percentage increase since AAA started tracking the data in 2000.
Dyed diesel is essentially the same as regular diesel, but it is exempt from the federal highway tax of 24.3 cents per gallon, as well as certain state highway taxes. State taxes and fees on diesel, which are typically used to fund road construction and maintenance, averaged 35.5 cents per gallon as of January 2026, according to the U.S. Energy Information Administration.
Dyed diesel is not available at most ordinary gas stations or truck stops, and it is normally prohibited for highway use. Instead, it is used off-road by farm vehicles like tractors. The fuel is marked with a small amount of red dye, so that inspectors can distinguish it from regular diesel.
That means that vehicles can use dyed diesel fuel on highways without immediately paying federal taxes, while the Administration seeks to eliminate those deferred tax obligations entirely. The order also encourages states to halt inspections and suspend state taxes for on-road use of dyed diesel.
“We’re not going to need it long, I hope, we’re not going to need it long because your prices are plummeting and they’re going to really be plummeting,” Trump said.
Currently, to fill an 18-wheeler with 250 gallons of diesel would cost around $1,580, which is around $700—or 80%—higher than the beginning of the year when diesel averaged about $3.52 a gallon. Waiving federal taxes would save truckers about $60 per fill-up. If states follow suit by waiving state taxes, the White House suggests truckers could save more than $100 per fill-up.
The order also aims to help farmers, historically a key voting bloc for Republicans. Farmers have been squeezed by soaring fuel and fertilizer costs, as well as the fallout from Trump’s trade war with China and lingering tariff-related uncertainty.
The Michigan Farm Bureau, which called on Gov. Gretchen Whitmer to provide statewide relief on dyed diesel, also said waiving the penalties on highway use of dyed diesel would produce “an immediate, meaningful, and targeted relief from record fuel prices.” The bureau said farmers already have significant stores of dyed diesel for off-road use, making it an easily accessible option for use on highways.
“Record-high diesel prices are squeezing our ag producers, and this is a meaningful and timely step we can take to provide temporary relief and help our farmers and ranchers through the harvest season,” Gov. Kelly Armstrong of North Dakota said last week. The state executive order allows farmers to use dyed diesel in highway vehicles engaged in agricultural operations. North Dakota charges 23 cents a gallon in state taxes on regular diesel, as compared to 4 cents a gallon on dyed diesel.
In an Oct. 1 letter to Trump, American Farm Bureau President Zippy Duvall said a waiver of the federal tax on regular diesel would “provide immediate cost relief for farmers, ranchers, and agricultural haulers that continue to rely on taxable clear diesel.” Earlier this year, the Farm Bureau called for suspending fertilizer tariffs and facilitating safe passage through Hormuz.
The Trump Administration has pursued other measures to lower fuel prices. Last week, the Group of 7 countries, which includes the U.S., agreed to release 100 million barrels of diesel and crude oil reserves over four months.
Last month, Trump weighed a ban on U.S. diesel exports, backed by some farm-state Republicans. But the President has not yet followed through on such an action, which would cut off global supplies from the world’s largest diesel exporter and likely worsen shortages around the world.
