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Government programs intended for one purpose often evolve to serve others. So it goes with the renewable fuel standard — aka ethanol mandate — which the Trump Administration is retrofitting to help farmers harmed by his trade brawl with China.
The Environmental Protection Agency this summer proposed quotas for renewable fuel that will have to be blended into the U.S. gasoline and diesel supply during the next two years. As usual, the agency’s quotas for corn ethanol exceed what can safely be blended into the fuel supply without damaging engines and transportation infrastructure.
That means refiners will have to buy credits from biofuel producers and blenders to comply with the mandates. Presidents of both parties have lacked the political courage to ease the costly ethanol mandate. Hell hath no fury like the ethanol lobby scorned. But now the Trump EPA is also raising quotas for advanced biofuels and biomass diesel made from soybean oil.
At the same time, EPA has proposed to cut in half the credit values for imported biofuels and feedstocks. The goal is to make refiners and biofuels processors use only U.S. soybean oil. But West Coast refiners have long-term contracts with foreign suppliers and can’t easily switch to U.S. soybean oil, which also can’t be easily transported from the Midwest.
What does all this mean? For one, higher costs for refiners, much of which will be passed on to U.S. consumers in higher prices at the pump. An analysis for American Fuel & Petrochemical Manufacturers estimated that EPA’s proposed rule will impose $70 billion in compliance costs on refiners next year, about twice as much as in 2023.
Doesn’t the Trump Administration want to ease regulatory burdens on businesses and reduce energy costs? EPA’s proposal will do the opposite. It could also boomerang because some producers won’t be able to swap out foreign biofuels or feedstock and may have to import more to generate the same credits.
Like its Biden predecessors, the Trump team is ignoring unintended consequences, though at least it is transparent about its goals. EPA says its proposal will “support domestic producers of feedstocks like soybean oil.” Agriculture Secretary Brooke Rollins said “the highest ever” quotas send a “strong signal to the U.S. biofuels industry that President Trump has their backs.”
The Administration is trying to mitigate the pain caused by Chinese retaliation to the President’s tariffs. The U.S. has long been China’s top soybean supplier. But “China has contracted with Brazil to meet future months’ needs to avoid purchasing any soybeans from the United States,” the American Soybean Association said in a letter to the President last month.
Soybean “prices continue to drop and at the same time our farmers are paying significantly more for inputs and equipment” thanks to the Trump tariffs,” the letter says. As a result, “soybean farmers are under extreme financial stress” and “cannot survive a prolonged trade dispute with our largest customers.” The best solution is to roll back the tariffs.
Instead, the Administration is trying to make refiners — some located in the swing states of Pennsylvania and Michigan — and drivers subsidize farmers and biofuel producers. One bad policy turn begets another.
This piece was originally published by the Wall Street Journal Editorial Board on September 4, 2025.
