(Bloomberg) -- President Donald Trump told a group of auto company executives that he is open to talks with California over vehicle fuel efficiency standards, something the industry is hoping can head off a battle between Washington and Sacramento.
The administration is readying a proposal to ease fuel efficiency standards, and the industry officials stressed the need for federal regulators to negotiate the new targets with California regulators to preserve the industry’s ability to sell the same vehicles nationwide.
Trump began the meeting at the White House on Friday by emphasizing his desire that more vehicles be assembled in the U.S. Underscoring that goal, the president at one point floated the idea that imported cars should be subject to a 20 percent tariff and stricter emissions standards than American-built autos, according to a person familiar with the matter.
He gave no indication that there were any formal efforts underway to implement such measures, the person said.
Executives of 10 carmakers, including General Motors Co., Toyota Motor Corp., Volkswagen AG and Fiat Chrysler Automobiles NV, attended the meeting. Among their chief concerns was preserving a de facto national standard for fuel economy by keeping California aligned with federal regulations.
“I am optimistic that the president can find a means to preserve a national program that drives continuous improvement in vehicle efficiency and, at the same time, allows us to build vehicles customers want, at prices they can afford,” Fiat Chrysler Chief Executive Officer Sergio Marchionne said in statement afterward.
Two people familiar with the White House meeting said that at one point during the meeting, Trump told his agency heads to try and make a deal with California. The three people who discussed the meeting spoke on the condition of anonymity because they weren’t authorized to comment publicly.
The president also expressed an openness to extending the efficiency standards until 2030 -- a key demand of California. The state has its own tailpipe rules that are aligned with federal targets through 2025, and is developing new standards through 2030.
In an interview last year, Mary Nichols, chair of the California Air Resources Board, said she was open adjusting the state’s greenhouse gas limits for cars and trucks through 2025 if federal regulators agreement to work on new targets for greater mileage further into the future.
“The price of getting us to the table is talking about post-2025,” Nichols told Bloomberg in September.
Extending targets and a federal effort to work with California officials could help bridge a widening chasm between Washington and Sacramento over the efficiency rules. California and several other states have already sued to challenge to a would-be rollback by the Trump administration, a move announced in fiery terms by Democratic Governor Jerry Brown.
The “process is just beginning” to revisit fuel economy and carbon emission rules, Marchionne said, which he termed “the right thing to do.”
The Alliance of Automobile Manufacturers and the Association of Global Automakers issued a joint statement after the meeting saying they appreciated Trump’s passion for the industry.
"We also appreciate the president’s openness to a discussion with California on an expedited basis,” the groups said in a joint statement.
The Alliance represents a dozen carmakers including GM, Ford Motor Co., and Daimler AG. Global represents several others including Nissan Motor Co., Honda Motor Co. and Hyundai Motor Co.
“The automakers’ statement suggests that the industry and the Trump administration are slowly recognizing that blowing up clean car standards is backfiring on them,” Roland Hwang, a director at the Natural Resources Defense Council, said in a statement. “If they truly want planning certainty, not regulatory chaos, they should keep the commitments they made.”
Automakers will now await the public release of a National Highway Traffic Safety Administration and the Environmental Protection Agency joint proposal to alter federal auto efficiency targets that take effect in the next decade.
A leaked draft of the proposal recommended freezing the targets at a 37 mile-per-gallon fleet average from 2020 through 2026, instead of rising to roughly 50 miles per gallon. The proposal, which could be released in late May or early June, will include several other proposed alternatives, creating room for a deal with California.
“It’s a pleasant surprise that Trump took the sensible advice of industry leaders and stepped back from the idea of going to war with California,” said Dan Luria, an independent auto analyst in Brighton, Michigan.
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