Treasury Secretary Sean Duffy Discloses Trump Vehicle Policy, Welcomes Chinese Vehicles

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January 25, 2026

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by Bob Kozak* (Advanced Biofuels USA) Public Policy Day at the 2026 Washington DC Auto Show 22 January 2026: A Look to the Future of the US Vehicle Industry -- As a kick-off for the annual Auto Show in Washington DC, held at the DC Convention Center, the show organizers put on something they call Public Policy Day. Because of its close proximity to Congress and the headquarters of key transportation agencies such as the Departments of Transportation (DOT) and Energy (DOE) and the Environmental Protection Agency (EPA), Policy Day has always been a good chance to catch up with current governmental directives. It was no different this year.

From the Congressional side, Representative Debbie Dingell (D-Michigan 6th) and Bob Latta (R-Ohio 5th) offered their perspectives while the Executive Branch was represented by DOE Under Secretary Alex Fitzsimmons and DOT Secretary Sean Duffy.

The topics of 2026 were different than in the past. CO₂ was not mentioned. Tariffs and markets were. Safety was the hot topic. Vehicle efficiency wasn’t. And, a new policy on China was quietly revealed. Also, it was really disappointing that no questions were taken from the audience. This was always a great feature of Policy Day. This year it was five hours of being talked at.

What EVs? Focus on Highway Safety and Autonomous Vehicles

I was looking forward to hearing from Representatives Dingell and Latta. Two years ago, 2024 Policy Day was highlighted by a fiery debate between Members of the House over the government’s role in subsidizing EVs (electric vehicles) to reduce CO₂ emissions. Instead, this year both Representatives focused on a bipartisan call for improving highway safety. While there are a number of relatively fast and inexpensive ways to improve driving safety; improved seat belt enforcement, stricter driving tests, and enhanced drinking/drug enforcement come to mind, these were not discussed. Instead, the focus was expanding self-driving, or autonomous technology, legislative requirements.

It was hard to understand why they were calling for this given the current state of the US vehicle market.

First, the US vehicle fleet is replaced quite slowly. The 16 million new vehicles sold in 2025 translates into only about 12% of American households buying a new vehicle every year. This means at a minimum new autonomous technology would take a minimum of about 8.5 years to be in most vehicles. However, it would actually take much longer. The US vehicle market is extremely bifurcated. A relatively small portion of the US population can afford to frequently buy new vehicles which now cost $50,000. The majority cannot. Hence while some people always have vehicles less than 5 years old and are driving sales, the reported average age of a vehicle owned in the US is now about 12 years. So, even if Congress passes legislation requiring autonomous vehicle technology, it would be a long time, probably over 15 years and multiple resales before vehicles with the technology trickled down to most of the population.

Second, autonomous vehicle technology is not cheap. It requires at a minimum flat plane array radar and hardware/software (everyone was saying AI would make it great) systems to control vehicle functions. $5,000 is probably the minimum price increase to add systems. What would that do to vehicle sales?

When autonomous vehicles were first being pushed, primarily by Tesla, over 10 years ago as the “next new thing,” they seemed to be a technology in search of a problem. No meaningful market was created by that marketing buzz. Now, it seems like “Safety” is being used to try to resurrect that expensive, and I suspect profitable, technology.

John Bozzella, Alliance for Automotive Innovation (L),
interviews US Transportation Secretary Sean Duffy

On to Government Controls and Markets.

Secretary of Transportation Secretary Sean Duffy was the keynote speaker. He opened up with a justification for the Trump Administration’s attempt to greatly reduce vehicle mileage and emission requirements. By doing this, he explained, American consumers would be able to “Choose the kind of vehicle they want.”

How would this be accomplished? “Markets should dictate,” solutions. While this sounds straightforward, this Administration is taking a rather convoluted approach to achieving it.

Instead of having EPA change vehicle emission standards, which, if done properly, can change CO₂ emissions and fuel economy, the Administration is instead changing the basis for something called the Corporate Annual Fuel Economy (CAFE) which is administered by the Department of Transportation. Why? As Secretary Duffy said, following this approach eliminates the emission reduction benefits EVs bring which would probably end most EV production in the short term.

How will this work?

Since US consumers, despite the $7,500 tax credit, never really took to EVs, something Secretary Duffy is correct in saying, manufacturers instead treated small numbers of EVs as a “relief valve” to meet EPA and CAFE emission standards.

Manufacturers added up the average emissions of their liquid fueled internal combustion powered vehicles and calculated how many “Zero CO₂ emission” vehicles would have to be sold to get their average emissions below the CAFE standards. Since the numbers of EVs needed to accomplish this were not that high, many manufacturers limited EVs to high priced SUVs and pick-up trucks. That way they could maximize EVs profits and still base most of their sales on relatively low-mileage SUVs and trucks.

Cynical? Yes, but because the EV market did not develop, it was also necessary to meet CAFE standards.

Will the Trump Administration be successful in eliminating EV emissions from CAFE standards which would eliminate the need to manufacture them? Hard to say, but consider the following: Secretary Duffy said at Policy Day that the CAFE standards only applied to internal combustion (IC) engine vehicles and so EVs emissions could be eliminated.

However, remember what CAFE means. Corporate Annual Fuel Economy. It would seem that Corporate means all vehicles produced by a manufacturer company. Furthermore, even though CAFE rules were originally developed under the 1970 Clean Air Act (yes Nixon pushed them through) some vehicles at that time were fueled with compressed natural gas (CNG) or gasoline with 10% ethanol (Gasohol). To accommodate them, EPA devised equations to convert the emissions of these vehicles to a baseline which was 100% gasoline. EPA continued with this approach for EVs and hydrogen fueled vehicles. It should also be noted that the Supreme Court has accepted this approach.

Therefore, even if the Administration is able to reduce CAFE mileage requirements for internal combustion engine vehicles, they still may be required to add in all EV emissions which would continue to give vehicle manufacturers flexibility on internal combustion vehicle mileage.

And so, while Secretary Duffy talks about markets driving buying and selling decisions, it seems that this CAFE strategy in some ways doesn’t really trust markets. Instead, it seems to want to rig the US vehicle market by removing incentives to build fuel efficient vehicles.

Duffy seemed to add another idea against pure market control. He somewhat wistfully called for an interesting approach to innovation and regulation. He thought they should move forward at a Goldilocks rate - not too slow and not too fast. So much for rushing innovations to market as soon as they’re discovered!

Now, On to the Real Blockbuster: China

Secretary Duffy was asked pointblank about Chinese vehicles entering the US market. He at first waffled. He said protecting some forms of US manufacturing from China which had “100 engineers to our 5,” was important; but he did not specify which ones.

Then he stated that if “non-government” Chinese firms wanted to sell vehicles in the US, that would be OK. He further went on to say Chinese manufacturing investments would be acceptable under certain terms.

I was stunned. I thought we were clashing with China on trade related issues. Then I looked at the next day’s Politico headlines.

Pentagon no longer views China threat as top priority says a new National Defense Strategy, and How the TikTok deal could tighten Trump’s cultural grip “(a)s Trump friendly billionaires take control,” (with 20% Chinese ownership).

I guess Secretary Duffy was just giving us an advanced view on what the US vehicle market could look like in 2028: China undercutting lower priced Korean and Japanese manufacturers while US manufacturers build low-mileage, autonomous, heavy weight pick-ups, SUVs, vans, and maybe, station wagons?

But don’t worry about fuel prices for lower mileage vehicles. We’re entering a period of “Energy Abundance” and leaving a period of “Mineral Scarcity” according to Alex Fitzsimmons, Under Secretary of Department Energy who also spoke at Policy Day.

*Bob Kozak is the founder and President of Atlantic Biomass, LLC, and a co-founder and board member of Advanced Biofuels USA. After working in the transportation, energy, environmental, and government relations industries, he is now focusing on the development of integrated end-to-end biomass-to-fuel systems that do not require pretreatment. He can be reached at atlanticbiomass @ aol.com

photos by Bob Kozak