Trump is planning a big change to your gasoline as a boost for one of the states hit hardest by his trade war

Bob Bryan
  • President Donald Trump is scheduled to visit Council Bluffs, Iowa, on Tuesday.

  • The visit will come after Trump is expected to announce a change to national fuel standards that will give a boost to Iowa corn farmers.

  • The Trump administration will allow the expanded use of E15, a fuel that contains 15% ethanol and 85% gasoline. Currently, most fuel is 10% ethanol and 90% gasoline.

  • The announcement comes as farmers in the state are being battered by the international response to Trump's tariffs.

President Donald Trump is set to try and make an appeal to one of states hardest hit by his administration's tariffs, offering a policy tweak that has long been sought by Iowa's farm industry.

Trump will head Tuesday to Iowa, a state that has been rocked by retaliatory tariffs in response to the US's trade restrictions.

"Will be going to Iowa tonight for Rally, and more!" Trump said. "The Farmers (and all) are very happy with USMCA!"

The "more" could be a reference to a new policy the White House is set to announced by the White House that would provide a boost to Iowa farmers and fulfill a long-time promise from the president.

He is set to unveil an expansion of the use of E15, a fuel mixture made up of 15% ethanol — a corn-based fuel — and 85% gasoline. Currently, the Environmental Protections Agency bans the use of E15 during the summer months due to smog concerns. The changes are expected to lift those bans by summer 2019.

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The year-round expansion of E15 use has long been a goal for Midwestern politicians and Iowa's farming industry, particularly Republican Iowa Sens. Chuck Grassley and Joni Ernst. Trump promised to expand the use of E15 during the run-up to the 2016 election.

"He thinks that it's good to have domestically produced energy here and he thinks it will be good for the agriculture industry as well as the economy overall," a senior administration official told reporters Monday.

The move will set off a fight with the oil industry, which opposes the shift to a higher percentage of biofuels, and could prompt backlash from oil-state politicians such as GOP Sens. Ted Cruz and John Cornyn. The oil industry argues that higher levels of ethanol can be harmful to car engines, despite the EPA approving the use of E15 in all light-duty cars since 2001.

In an attempt to assuage the industry, the Trump administration is also proposing changes to a system of credits that allow oil refiners to get around certain ethanol obligations.

While the move is a big win for farmers in the Midwest, it may also be timed as an effort to soften the blow from Trump's intensifying trade war with China and other nations. Iowa, in particular, is expected to take a significant hit from the trade disputes.

According to the Center of Agriculture and Rural Development at Iowa State University, Iowa's gross state product could take a $1 billion to $2 billion hit from Trump's trade fights. Similarly, the US Chamber of Commerce estimated that $1.4 billion worth of exports from Iowa are currently subject to retaliatory tariffs from China, Canada, Mexico, and the European Union.

The use of ethanol to counteract some of the trade war damage follows other efforts from the Trump administration to soften the tariffs' blow on US farmers. The US Department of Agriculture is handing out $4.7 billion in aid to farmers in one of those moves.

It also carries a political benefit for the GOP, which is fighting to keep the governor's mansion in Iowa. According to the Real Clear Politics average of recent polls, Democratic challenger Fred Hubbell is up 3.5 percentage points on Republican incumbent Kim Reynolds, who took over as governor in 2017 after Terry Branstad become Trump's ambassador to China.

Also, GOP Rep. David Young, the current representative in Iowa's 3rd district, is facing a tough challenge from Democrat Cindy Axne. The third district includes Council Bluffs, the site of Trump's Tuesday rally.

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