Trump Proposes Federal Gas Tax Suspension Amid Economic Strain from Iran Conflict

In a strategic move to mitigate the escalating fuel costs exacerbated by the ongoing conflict with Iran, Donald Trump is considering temporarily eliminating the federal gas tax. This decision is aimed at providing some relief to consumers burdened by soaring prices as the midterm elections approach.

During an interview with CBS News on Monday, the President expressed his intention to suspend the federal gas tax. “We’re going to take off the gas tax for a period of time, and when gas goes down, we’ll let it phase back in,” he stated. This tax suspension would reduce the price by 18.4 cents per gallon for gasoline and 24.4 cents per gallon for diesel.

Such a measure could offer some relief to drivers who have been grappling with a 50 percent surge in prices since the conflict began, raising the national average to $4.52 per gallon. If implemented, the average price could drop to approximately $4.34, although this would still be significantly higher than the pre-conflict average of $2.98 per gallon reported before February 28.

The decision comes amid stalled negotiations between Iran and the United States, as Trump recently dismissed Tehran’s latest proposal as a “very stupid proposal,” leaving no sign of an imminent peace agreement. Despite the challenges, the administration remains focused on addressing the economic pressures faced by American consumers.

The move comes with Iran and the US no closer to a peace deal, after Trump slapped down Tehran’s latest counteroffer as ‘a very stupid proposal.’ 

Iran’s demands include reparations and control over the Strait of Hormuz. 

‘We will never bow our heads before the enemy,’ Iran’s president, Masoud Pezeshkian, said Sunday. 

Some 63 percent of Americans blame Trump for the price surge, while more than 80 percent say pump costs are straining their finances, an NPR/PBS/Marist poll released last week found. 

Donald Trump hosts an event promoting maternal healthcare in the Oval Office of the White House in Washington, DC, on Monday

US Army veteran Chuck Gilmer replaces the gas pump in the Dallas suburb of Richardson, Texas, last week. Trump’s proposed tax break would offer modest relief for drivers

Trump’s advisers are increasingly worried Republicans will pay a political price at the ballot box this November and are eager to end the war before prices wreck the midterms.

The President told reporters Monday that the price ‘will drop like a rock’ and has insisted that it is ‘a very small price to pay for getting rid of a nuclear weapon from people that are really mentally deranged.’

He even branded Energy Secretary Chris Wright ‘totally wrong’ last month after Wright conceded relief at the pump may not arrive until 2027.  

Trump warned Monday he may be planning ‘severe’ action to reopen the Strait of Hormuz, conceding the ceasefire with Iran ‘is on massive life support.’ 

Oil surged on the latest discord with global benchmark Brent crude hitting $104 per barrel, a 2.5 percent increase. Brent is up around 40 percent since the war started.

Ex-New Hampshire governor Chris Sununu, a Trump critic now lobbying for the major airlines, personally warned Treasury Secretary Scott Bessent on a recent Washington visit that already-sky-high airfares will surge further if the war does not end soon.  

The Airlines for America president said Trump officials grasp the danger. 

‘They get it … and I think that’s why they’re trying to get through the war as fast as they can,’ Sununu told the Wall Street Journal last week. 

The war has already claimed its first airline casualty. Spirit collapsed into liquidation on May 2 after jet fuel prices roughly doubled in the opening weeks of the conflict and the Trump administration walked away from a $500 million bailout. 

The average domestic round-trip ticket has jumped 21 percent to $570, and Sununu warned even a sudden reopening of the strait won’t bring quick relief.

‘You’re looking at elevated ticket prices through the summer and fall because it takes a while for the prices to go down,’ he said.

Trump is expected to use a trip to China this week to press Xi Jinping to lean on Iran, with Beijing the biggest buyer of Tehran’s sanctioned crude oil.

The two sides remain miles apart. Trump is demanding a sweeping rollback of Iran’s nuclear program, while Tehran wants a narrower deal that would reopen the Strait of Hormuz and lift the US blockade of Iranian ports before deeper talks begin.

Iran has offered to dilute part of its highly enriched uranium and ship the rest to a third country, with Russia previously offering to take it, two regional officials told the Associated Press.

Trump wants the material removed entirely and is unlikely to swallow Tehran’s other demands, including formal recognition of its control over the strait and US war reparations.

Israeli Prime Minister Benjamin Netanyahu, who launched the war alongside Trump, insisted the conflict is ‘not over,’ telling CBS that if the nuclear material can’t be pried out through diplomacy, Israel and the US agree ‘we can reengage them militarily.’

He told 60 Minutes that the Iranian government’s ‘days are numbered, but it could take a lot of days.’

The US and Israel killed dozens of high-ranking Iranian officials in the opening salvos of the war, including Supreme Leader Ayatollah Ali Khamenei, and the conflict has gutted Iran’s economy. But theocracy is still standing.