Trump’s yo-yo on tariffs disrupts markets, creates uncertainty, freight interests say

President Donald Trump’s on-again, off-again threat of major tariffs on the United States’ closest allies, Canada and Mexico, have earned the thumbs down from freight officials and financial interests.

Trump’s directive by tariff – “WILL THERE BE SOME PAIN? YES, MAYBE (AND MAYBE NOT!)” – wore thin on freight and financial experts longing for stability in markets and crucial consistency from an inconsistent lame-duck president.

Even the hard-right conservative editorial page of the Wall Street Journal – usually a reliable barometer of right-wing world – slammed Trump’s latest tariff threats by entitling an editorial on the subject: “The Dumbest Trade War Fallout Begins.”

Markets yo-yo’d after Trump first announced tariffs between 10 and 25 percent on Mexico and Canada – our Nos. 1 and 3 largest trading partners – before backing down during a 30-day cooling off period. It’s Trump’s second round with tariffs, after trying them on assorted countries from 2018-19 in his first term.

“Potential tariff policy continues to be a moving target,” Derek Leathers, chairman and CEO of Werner Enterprises, a major truckload carrier that gets 10% of its revenue from Mexico traffic, said on an earnings call. “It’s “difficult to comment specifically on depth and duration as information is changing in real time.”

Trump’s tariffs against China, which he ordered to begin on Feb. 4, are an additional 10% duty on the value of the goods.

Even reliably conservative backers such as the National Association of Manufacturers blasted the newest tariffs. Jay Timmons, the NAM CEO, says a 25% tariff on Canada and Mexico “threatens to upend the very supply chains that have made U.S. manufacturing more competitive globally.”

Uncertainty reigns. “Nobody knows what’s up,” Nick Pinchuk, CEO of tool-maker Snap-on, said on a conference call. “It’s like being on Space Mountain at Disney World.”

U.S. manufacturers were hoping to exit a two-year slump in 2025 under what they thought was going to be a business-friendly White House. But that was before President Trump’s return as Tariff-in-Chief.

“I don’t think tariffs are going to help us,” said Timothy Fiore, former chair of the closely followed survey of industry executives compiled by the Institute for Supply Management. “This is not a good thing for business.”

Before Trump announced his threatened tariffs, the ISM manufacturing survey turned positive for the first time in more than two years. The ISM index rose to 50.9% in January from 49.2% at the end of 2024.

It’s the first time the index has also topped the critical 50% threshold in 27 months. Anything above 50% signals expansion.

“There is a lot of stuff going on here,” Fiore said. “I think you have to grit your teeth here for [a while] and see what happens.”

The index had surged on optimism about Trump’s vow to cut taxes and reduce regulations. But the mere mention of tariffs dampened that optimism.

“Tariffs are taxes,” Cary S. Davis, president and CEO of the American Association of Port Authorities (AAPA), said in a statement.

“Though the port industry supports President Trump’s efforts to combat the flow of illicit drugs, tariffs will slow down our supply chains, tax American businesses, and increase costs for hard-working citizens,” Davis added.

Instead, Davis called on the Administration and Congress to thoughtfully pursue alternatives to achieving these policy goals and “exempt items critical to national security from tariffs, including port equipment.”

Jason Seidl, transportation analyst for T.D. Cowen, a division of TD Securities, said in a note to investors that parcel consolidators and freight forwarders have the highest exposure to international trade given global commerce touches every piece of the revenue base.

C.H. Robinson, a leading third-party logistics company, could have as much as 20% of its consolidated revenue in Global Forwarding to/from China as well as Europe.

Class 1 railroads have “direct exposure” to cross-border trade as well as seaborne imports which drive international intermodal. Union Pacific likely has the highest exposure. As many as one fourth of international shippers told Cowen in a freight survey had pulled shipments forward due to tariff fears.

UP has as much as 11% of its revenue exposed in freight in and out of Mexico. The CSX railroad has between 10% and 15% pf its revenue exposed to cross-border traffic in and out of Mexico and Canada.

Analysts say an improvement in demand and contract rates will begin is the threat of tariffs on the nation’s neighbors, Mexico and Canada, are slated to start – if at all. Trucks move 85% of goods that cross the United States’ southern border and 67% of goods that cross its northern border.

Over the road, truckload carriers tend to have larger cross-border exposure than LTLs which have negligible exposure (leaving aside any broad-based economic impacts from the tariffs themselves). Cross-border is a small percentage of brokerage business. Trucking has less direct exposure to seaborne trade than the rails.

For Werner Enterprises, Mexico is about 30% of one-way freight with perhaps slightly more than 10% exposed to cross-border logistics services, according to Seidl.