How Automaker Ford Outfoxed Trump
A case study in the regulatory power of Compliance Leadership
TL;DR: In 2019, Ford voluntarily adopted California’s stricter emissions standards—defying Trump and going beyond federal requirements. The decision, rooted in regulatory foresight and compliance leadership, gave Ford long-term influence, global competitiveness, and a reputational edge. This is what regulatory power looks like in action.
Last year, I began stitching together a framework I’m calling The 8 Regulatory Powers.
The name won’t win any branding awards, but the concept is clear: the most successful companies don’t react to regulation—they shape it.
And failure to master even one of these powers? That’s regulatory malpractice.
As a reminder, these powers are:
Regulatory Foresight: Anticipate what’s coming.
Government Engagement: Build influence through relationships.
Compliance Leadership: Go beyond minimum standards.
Advocacy Influence: Shape the regulatory narrative.
Coalition Building: Find strength in numbers.
Regulatory Adaptability: Design for agility.
Public Trust: Earn reputational capital.
Societal Alignment: Sync your goals with society’s.
As I continue to build out this framework, I’m digging into each one with more detail, exploring case studies I’ve compiled in my research.
Today, I look at how Ford applied the Power of Compliance Leadership in voluntarily agreeing to California’s stricter fuel-efficiency framework ahead of federal requirements. The payoff? Avoiding a patchwork of standards while securing regulatory certainty and goodwill with regulators. Let’s dig in!
Snapshot: what happened
This case study is fascinating because it involves big industrial players striking a deal with California to uphold stricter emissions standards when the federal rules were poised to loosen. It’s a great example of proactive self-regulation to gain regulatory certainty in long-term product planning.
Context: two roads diverged
Rewind the tape to 2018 and we find that the U.S. auto industry was caught between duelling regulatory visions.
On one side, the Trump 1.0 administration, seeking to roll back Obama-era fuel economy and emissions standards. The plan? Freeze requirements at 2020 levels through 2026 instead of continuing to tighten them. The Safer Affordable Fuel-Efficient (SAFE) Vehicles plan represented a dramatic loosening of rules, far beyond what the auto industry expected.
On the other side? California, empowered by a special Clean Air Act waiver, insisted on maintaining stricter standards to fight smog and climate change, as it had for decades. Under the Clean Air Act, California holds unique authority to set its own auto emissions rules (with EPA approval). A coalition of 13 other states (plus D.C.) can opt-in to those tougher standards. Combined these states make up one-third of the U.S. car market, which means California’s regulations have a massive impact on automakers’ national strategies.
This should come as no surprise, but the Trump administration was on a mission to revoke California’s waiver outright, aiming to eliminate the state’s power to go beyond federal requirements. Trump took to Twitter to tell the automakers to come onside to make cars far less expensive for consumers.
The automakers’ dilemma
Automakers feared a regulatory schism: a scenario of split markets requiring two sets of vehicles (one to meet California-led states’ rules, another for federal rules), or years of litigation which would only create sustained uncertainty. And they said as much in a June 2019 letter to President Trump, with 17 major automakers warning that a prolonged fight and patchwork regulations would be “untenable.” They’re ask? A compromise between the federal government and California.
Most automakers were not asking for the Obama-era targets to be scrapped; in fact all major automakers publicly opposed the Trump administration’s preferred option of a freeze at 2020 levels. They were seeking certainty and moderate improvement, rather than a whipsaw in either direction.
The rogue four make their move
In July 2019, Ford, Honda, BMW, and Volkswagen struck a voluntary agreement with the California Air Resources Board to follow stricter emissions standards through 2026, exceeding the lenient federal requirements.
Trump responds
Trump responded in typical Trump fashion, stepping up a series of attacks on the automakers for not backing his administration's plan to roll back fuel efficiency rules, going hard after Ford.
Trump said company founder Henry Ford would be "very disappointed if he saw his modern-day descendants wanting to build a much more expensive car, that is far less safe and doesn’t work as well, because execs don’t want to fight California regulators.”
Ford holds its ground
Under this deal, Ford and its cosignatories agreed to yearly fuel-efficiency improvements that were more ambitious than the Trump rules but slightly less stringent than the original Obama-era plan. In other words, these automakers chose to meet a higher bar than the law required, even as Washington was headed in the opposite direction.
Why it mattered
For a major U.S. automaker to voluntarily embrace tougher environmental rules was virtually unprecedented. Traditionally, the industry lobbies for the most flexible, low-cost regulatory option. Yet, this time, the strategic assessment produced a different path - that taking the high road on emissions would be commercially advantageous even if it caused significant political heart burn with the President of the United States.
While Ford used the moment to virtue signal, publicly noting, “we believe we mutually deliver on CO₂ reductions consistent with the Paris Climate Accord,” pointing to a planned $11 billion investment to put 40 hybrid and electric models on the road by 2022, this was motivated by a more practical need: “one set of standards” nationwide to avoid chaos.
The strategy behind compliance leadership
The decision by the rogue four came as a surprise at the time, but it was the obvious move for Ford to make. Its top executive had already committed to aligning the company with global climate goals and cleaner vehicles - a commitment that made stricter emissions standards a feature, not a bug, of their commercial strategy.
Take the highest level of compliance, even if you’re not required to, and you reduce longer-term regulatory risk. It’s so obvious when we see it play out like this, but how many organizations actively seek to embrace the highest regulatory regime? In my experience, regulatory and public affairs teams are tasked with slowing down or reversing stricter regulatory regimes.
Several key factors drove Ford’s compliance leadership strategy:
Reputation and brand trust. While it may not feel like it in 2025, this case study takes place in an era of rising environmental awareness, which means Ford’s alignment with strict emissions standards would help bolster its image as a responsible automaker. The move also differentiated Ford as a company willing to do the right thing, even when it wasn't forced to. Not a bad message to convey in eco-conscious markets like California and Europe. And I bet many employees felt a sudden surge of pride a well.
Authenticity. CEO Bill Ford had long championed sustainability within the company, contrasting with competitors lobbying for rollbacks. Compliance leadership positioned Ford the brand, and Ford the CEO as an industry good guy. In other words, the decision was a natural one, requiring a lot less explaining. And as we all know, when you're explaining, you’re losing.
Foresight. We see a second regulatory power at play here. Ford correctly anticipated the political winds would eventually shift. By 2019, with one year left in the Trump 1.0 administration, the company would have a heightened level of confidence that states and perhaps a future federal administration would push back on Trump’s rollbacks. By exceeding the minimum, Ford gained a seat at the table in shaping future regulations. In fact, after the 2020 election, Ford actively urged other automakers to embrace the California framework as the basis for nationwide standards (always an easy ask when you’re already compliant).
Influence. Ford’s early compliance made it a natural partner for regulators drafting new rules. California’s air regulator chair Mary Nichols even suggested the Ford-California agreement was a “good template” for national policy. In other words, compliance become leverage - guide the rule making instead of resisting it. This is what holding regulatory power looks like: Ford’s influence could ensure the future standards were not only stricter, but also practical and in line with Ford’s technical readiness.
Alignment and Investment. Well before these events, Ford had committed billions to develop electric vehicles (EVs), hybrids, and other clean technologies. The company’s product roadmap – including models like the Mustang Mach-E electric crossover and F-150 Lightning electric pickup – depended on a transition to lower emissions. By 2019, Ford was already on track to invest $11 billion in electrification, with plans for dozens of electrified models by the early 2020s. Ford executives viewed stronger standards as catalysts for innovation: clear targets that justified and accelerated the company’s R&D in efficient engines, batteries, and lightweight materials. Rather than strand those investments, Ford’s voluntary compliance synchronized policy with its engineering trajectory.
Competitive edge. Competitors taking the opposite approach – delaying innovation in hopes of laxer rules – risked being caught flat-footed when inevitably standards tightened or market demand shifted to greener vehicles.
Avoiding market fragmentation. Different standards in different states can force automakers to either build two versions of each car (expensive and inefficient) or else limit certain models to certain regions (conceding sales where they don’t comply). Ford’s deal with California was a way to pre-empt this problem. By designing all its cars to meet the higher standard, Ford would effectively have one national fleet that could be sold in all 50 states without issue. This simplifies manufacturing and supply chain management. It also wins favor in states following California’s lead – Ford would have plenty of compliant models available for sale, whereas a rival sticking to weaker federal rules might find itself unable to offer those models in a large chunk of the market. In short, Ford bet that the cost of extra compliance now was lower than the cost of regulatory whiplash and market fragmentation later.
Global competitiveness. Outside the U.S., many countries were tightening emissions standards and promoting electric vehicles aggressively. Europe, for example, had stringent CO₂ targets for automakers, and China was moving quickly on electric cars. If the U.S. went lenient but the rest of the world didn’t, American automakers risked falling behind global competitors in clean tech. By voluntarily staying on a stricter path, Ford ensured it remained competitive internationally and wasn’t locked into outdated technology.
Political Fallout
But it’s one thing to develop the strategy and execute it. It’s another to stick to it in the face of political attack. And the attack went well beyond Trump’s public lambasting of Ford on Twitter.
The Environmental Protection Agency rebuked the voluntary California framework, dismissing it as “nothing more than a press release” with no impact, and a glorified “PR stunt.”
Much more alarming the U.S. Department of Justice opened an antitrust investigation into the four automakers involved in the deal. The implication? By collaborating on the California emissions standard, Ford and its peers were conspiring to raise consumer costs or limit choice.
California’s governor blasted the DOJ’s move as “trumped up charges…a blatant attempt by the Trump administration to prevent more automakers from joining California.”
The case was eventually dropped, but it lingered long enough that one automaker that had contemplated joining the voluntary framework backed away.
How did Ford respond?
It defended its choice on principle and data. It responded to the attack by stating that it is “focused on acting to protect the environment while also protecting the affordability of vehicles.”
Unlike some competitors, it didn’t seek to placate the administration with half-measures.
When you’re explaining, you’re losing. Ford didn’t need to explain—it just acted.
The competitors’ misstep
Ford was one of four automakers who signed the voluntary framework. What about the others?
General Motors and Toyota—two of the world’s largest automakers—chose to back the Trump administration’s approach. GM criticized the California agreement on the grounds that it didn’t give enough credit for GM’s investments in electric vehicles. These automakers made a short-term calculation that aligning with a friendly federal administration would be safer than aligning with California’s environmental stance.
This divergence would prove temporary. You know what happens next. The 2020 U.S. presidential election. As President-elect Joe Biden signalled return to aggressive climate action and support for EVs, GM announced a remarkable about-face. CEO Mary Barra announced that GM was “immediately withdrawing” from the Trump administration’s lawsuit against California’s authority, and she even invited other automakers to join GM in dropping opposition.
The Power of Regulatory Foresight is also at play here. GM had failed to see the potential political change or fully consider how the Biden administration could reshape their regulatory environment. Better late than never, but while GM was in reactionary mode, Ford was in the driver’s seat (pardon the bad pun).
GM wasn’t alone. In early 2021, Toyota, Fiat Chrysler, and a coalition of automakers followed suit. In a joint statement, Toyota and others declared they were abandoning support for Trump’s effort to block California, “in a gesture of good faith and to find a constructive path forward” with the Biden government. The group also voiced alignment with Biden’s goals of continuous annual improvements in fuel economy.
Compare this to Ford’s role in this. It anticipated where the industry was headed and never had to flip-flop—it was already positioned on the side of stronger standards and EV investment, so it was in the enviable position of welcoming the industry’s and governments return to that trajectory. It competitors, on the other hand, had to play catch-up in both policy stance, and perhaps even technological readiness.
By 2021, every major automaker effectively joined Ford’s position that a higher bar on emissions was the way forward. It turned what is often seen as a cost (regulation) into an opportunity to differentiate and lead.
Regulation isn’t just a cost. It can be a competitive moat
Final Takeaways
Ford actively sought tougher rules knowing it was positioned to meet them. In doing so, it gained moral authority and practical influence. When a company demonstrates that stronger standards are achievable—because it is already meeting them—it undercuts arguments that such regulations are impossible or economically ruinous.
This has the subtle but real effect rule making: regulators can point to that industry leader and say, '“If they can do it, the rest can too.” In Ford’s case, the company’s early adoption of higher emission standards likely made it easier for the Biden administration to justify a more ambitious national policy, because a chunk of the industry was already on board in practice. Ford essentially modelled the future, and the future arrived faster as a result.
By taking the first step, Ford set an industry benchmark. Even before any law compelled it, Ford’s actions helped establish the California agreement figures as the reference point for “responsible” industry behavior. Such leadership can snowball – suppliers begin developing parts to the higher standard, trade associations start discussing how to implement it, and the whole ecosystem shifts. The end result is a new baseline that the leader (Ford) was instrumental in creating, and which it was already prepared to meet.
Ford didn’t wait for the future. It shaped it.
By using the powers of foresight and compliance leadership, it turned regulation into runway—while competitors were still fighting the headwinds.
That’s the kind of regulatory power that defines industry leaders in the age of politicized policy.