President Donald Trump is coming under increasing pressure to cut household costs as he seeks to broker a more permanent peace deal with Iran.
Six months before November’s midterm elections, nearly two-thirds of polling respondents disapprove of the job Trump is doing regarding the economy, as the continued closure of the Strait of Hormuz has choked off one-fifth of the world’s oil supply and raised gasoline prices.
But Trump and the White House remain adamant they are steering the country in the right direction, with the president this week dismissing the idea his decisions concerning Iran are influenced by “Americans’ financial situation.”
“The most important thing by far is Iran cannot have a nuclear weapon,” Trump told reporters on the South Lawn before departing for China. “Every American understands.”
Yet, the White House is also taking several steps to lower the cost of living. Here’s what they’re doing.
Suspending the federal gas tax
Trump this week endorsed Congress temporarily suspending the federal gas tax, which would lower the price of a gallon of gas by 18 cents and its diesel counterpart by 24 cents.
There is bipartisan support for a gas tax “holiday” and even calls for one to become permanent, despite concerns related to its long-term consequences on the federal deficit and the Highway Trust Fund.
For example, economists estimate that any Highway Trust Fund shortfall from a gas tax suspension would likely be covered by general government revenue, which would add about $12 billion to the deficit.
But White House economic spokesman Kush Desai defended the policy, contending that any Highway Trust Fund shortfall would be insignificant because the suspension would be for a short period of time and that 18 cents per gallon “obviously adds up.”
“For a lot of Americans who live in rural, and exurban, and suburban areas who are filling up their car once or twice a week, if not more, those 18 cents adds up,” Desai told the Washington Examiner. “The other point I want to reiterate is that, like the president said, this is not a long-term reality. It’s a short-term disruption. And so this is a short-term mitigation strategy to give some breathing room in the short-term until the Iran situation as a whole gets more worked out.”
Bipartisan Policy Center economic policy vice president Shai Akabas told the Washington Examiner that gas prices could still increase even with the holiday in place because of the situation in the Middle East.
“Without addressing underlying causes, it will be challenging to deliver relief that households will feel in their everyday cost of living,” said Akabas.
Supporting the housing bill
Trump this week also repeated his endorsement of the Senate‘s housing affordability proposal that has faced steep opposition in the House.
“Senators Bernie Moreno and Tim Scott have worked to ensure my call becomes a reality, and have a Bill which has passed the Senate with nearly 90 votes,” Trump posted on Truth Social. “I am asking Congress to pass that Bill, the 21st Century ROAD to Housing Act, which would ensure that homes are for people, not Corporations.”
The legislation would similarly introduce more incentives to construct new homes, create a program to convert abandoned buildings into housing developments, and offer funding to renovate existing structures.
“A month or so ago he signed a couple of executive orders on housing and, basically, one of the main things was to get new home construction up,” Desai, the White House spokesman, said. “It basically tasked the White House to formulate within 90 days a best practices guide of, ‘here are the regulations you should embrace to maintain safety and all of that, but without [getting] in the way of new home construction.’ And so once you [have] that, then we’ll work with the states and local governments that adopt those.”
House Republicans have expressed reservations, however, about the measure’s provision that prohibits large institutional investors from purchasing single-family homes. To secure passage, Trump will likely need to get involved as the House and Senate plot a path forward.
Lowering beef tariffs
Trump is reportedly planning to also temporarily lower tariffs on beef through executive action as he did for coffee, beef, and bananas last November. The Wall Street Journal reported this week that the administration would additionally provide beef farmers with more federal funds and help through deregulation.
Desai told the Washington Examiner the executive action will go “hand in hand with addressing the root of the issue, which is that the domestic cattle herd size is at a multidecade low.”
“The tariff stuff would be a temporary reprieve, and then there’d be more longer-term action to get the domestic beef production up,” he said.
But American Enterprise Institute senior fellow Desmond Lachman is skeptical that decreasing beef tariffs would put downward pressure on prices.
“Despite the easing of tariffs on Argentine and Brazilian beef imports, beef prices still went up by 12% over the past year,” Lachman told the Washington Examiner.
What else can Trump do?
As a more permanent peace deal with Iran eludes Trump, there are other options the president could consider to reduce household costs, according to AEI’s Lachman.
Lachman encouraged Trump to keep prioritizing the reopening of the Strait of Hormuz to decrease the price of oil and fertilizer.
“That would get lower gas and diesel prices as well as prevent a spike in food prices later in the year due to higher fertilizer prices,” he said.
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Desai said despite the current issues, the country’s long-term trajectory was still stronger under the Trump administration. He cited Treasury Department data that indicate the budget deficit after the first year of Trump’s second term has declined by more than 20% in comparison to the previous year.
“There’s been this big long-term focus on streamlining the government and cutting out bloat,” the spokesman said. “In the short term, obviously the Iran war is costing defense expenditures. But the long term here is that we’ve objectively gotten into [and] continue to go into every single agency and look for cuts that can be made where we’re not compromising core services or anything like that, but being better stewards of taxpayer dollars.”