Trump Calls Gas Tax Holiday ‘A Great Idea'-Analysts Disagree

President Donald Trump has vowed to temporarily suspend the federal gas tax, an idea he says will lower prices for American drivers but one analysts consider an ineffective-and potentially risky-remedy.

In an interview with CBS on Monday, Trump said he wanted to eliminate the 18-cent levy "for a period of time," before letting it "phase back in" once prices returned to normal. A day prior, Energy Secretary Chris Wright had said the administration was "open to all ideas" when it came to lowering the price of gas.

The nationwide average for a gallon of regular unleaded gas was $4.50 on Tuesday, according to AAA, and prices have risen by over 50 percent since the war with Iran began on February 28.

And while Trump called the suspension of the tax a "great idea," energy market experts who spoke with Newsweek believe the move-even if approved by Congress-would do little to curb rising prices.

What Is the Federal Gas Tax?

The federal gas tax is a charge placed on fuel sales to help fund transportation infrastructure across the country. The proceeds go largely to the Highway Trust Fund, from which states can draw for road construction and maintenance, as well as other transportation priorities.

The federal excise tax adds 18.4 cents to each gallon of gas-a rate that has not changed since 1993-while diesel is hit with a 24.4-cent surcharge.

Why Is Trump Proposing A Gas Tax Break?

Suspending the gas tax is one of several measures the administration has considered or implemented to rein in rising fuel costs. Others included releasing supplies from the U.S. Strategic Petroleum Reserve, pausing fuel blending and transportation regulations, and urging refiners to, as the energy secretary said Sunday, "do shorter maintenance work this spring so they can keep pumping out more products.”

But energy prices continue to soar, helping drive annual inflation to 3.8 percent in April-its fastest pace in either of Trump’s presidencies.

In March, congressional Democrats introduced legislation to temporarily suspend the gas tax, saying it would "deliver economic relief to Americans across the country." Since the president made his comments to CBS News, a number of Republican lawmakers have voiced similar support.

Missouri Senator Josh Hawley on Monday introduced legislation to suspend the tax for "at least 90 days," while Representative Anna Paulina Luna said she planned to do so in the House this week, "in light of Trump's recent remarks."

Robert Yawger, an energy futures strategist at Mizuho Financial Group, said the suspension "would help," but only by slowing the pace of increases rather than lowering costs outright for drivers.

Doing so would knock at most 18 cents per gallon off pump prices nationwide, which have climbed by 25 cents for two consecutive weeks, according to AAA.

David Goldwyn, president of the international energy consultancy Goldwyn Global Strategies, told Newsweek that a gas tax holiday is "unlikely to affect prices at the pump more than a dime or so," given retailers "don’t always pass along the full amount of savings to customers."

"They will certainly stop contributing the $0.18 a gallon to the federal Treasury," he said, "but it doesn’t mean they’re going to lower their prices by $0.18."

Goldwyn, formerly a State Department special envoy for International Energy Affairs, added that the move would also contribute "significantly" to the deficit while "depleting the Highway Trust Fund."

According to one estimate from the Committee for a Responsible Federal Budget (CRFB), a one-month suspension of the tax would cost the government at least $2.5 billion.

Although the tax has never been fully suspended, eliminating it has been proposed during other fuel crises. Veteran energy market analyst Philip Verleger told Newsweek that such proposals during past periods of difficulty would have had no impact on retail costs, and that this "remains true today."

"My quick conclusion is that this is the worst managed energy crises of the 23 I have tracked," Verleger told Newsweek, adding that he would "not be surprised" to see gas rise to $7 per gallon and diesel reach $10 by the end of summer.

What States Have Suspended Their Own Gas Tax?

States also impose their own gas taxes in addition to the federal levy, adding anywhere from around 9 cents to 71 cents per gallon, depending on where motorists fill up.

According to an NBC News analysis, state taxes and fees are, in most cases, higher than the federal gas tax, meaning eliminating them could provide even more relief than the measure Trump is now supporting.

And several states, including Georgia, Indiana and Utah, have already suspended the local duty amid the energy crisis.

Last week, Kentucky Governor Andy Beshear unveiled an emergency executive order lowering the state's gas tax by 10 cents, a change that took effect Monday.

But even if both state and federal excise taxes were removed, NBC News found that gas prices would still be about 35 percent higher per gallon than they were when the conflict began.

What Else Could Trump Do?

Analysts say the administration still has weapons at its disposal.

Tom Kloza, chief energy adviser at Gulf Oil, told Newsweek that now that all "easy levers" have been pulled, the U.S. could resort to the "epic measure" of limiting oil exports.

"But that could lead to eventual refinery closures and haunt the American landscape for decades," he said.

"All of the buffers which have helped moderate prices so far, release of the Strategic Petroleum Reserve, depletion of commercial inventories, even temporary waivers of sanctions on Russian and Iranian oil have all now been exhausted," Goldwyn told Newsweek. "Barring a diplomatic resolution we are looking at a national average of five dollars a gallon."

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This story was originally published May 12, 2026 at 1:40 PM.