New 25% truck tariff adds another layer of uncertainty for shippers

The White House’s 25% tariff on imported heavy-duty trucks went into effect on November 1.

A social media post issued by President Trump on September 25 stated he was taking this action, “In order to protect our Great Heavy Truck Manufacturers from unfair outside competition,” adding that, “our Great Large Truck Company Manufacturers, such as Peterbilt, Kenworth, Freightliner, Mack Trucks, and others will be protected from the onslaught of outside interruptions. We need our Truckers to be financially healthy and strong, for many reasons, but above all else, for National Security purposes!”

And an October 17 proclamation by the White House said that the key objectives of this action focus on various things, including: strengthening national security by rebuilding domestic production of critical vehicles and parts; encourage U.S. manufacturing investment; stabilizing U.S. market share of domestically produced medium- and heavy-duty vehicles (MDHV) at around 80%; and reduce dependency on foreign supply chains for defense and infrastructure resilience. It also stated that USMCA-exempt MHDV may receive adjusted tariffs based on the percentage of U.S. content and a 25% tariff will be applied to the non-U.S. content only, if properly documented.

Matthias Bauer, partner at EFESO Management Consultants, said that these tariffs are what he called “make or break” for the trucking industry.

“The trucking tariffs taking effect on November 1 will create winners and losers in today’s trucking industry,” noted Bauer in comments provided to LM. “The playing field is the same for everyone, but those who adapt strategically will emerge successful, while those who remain stagnant will be left behind. Tariffs provide temporary relief for deeper competitiveness issues, and they often last far longer than expected. For example, the chicken tariffs from 60 years ago were intended as a short-term retaliatory measure, but the tariffs on light trucks imported to the U.S. still remain in place today.

More recently, Tariffs imposed under the first Trump administration remained in place under President Biden and are still in effect today. History tends to repeat itself, and waiting for conditions to ‘return to normal’ may be a mistake. That said, tariffs can be mitigated through more innovative product design, manufacturing/ assembly, and procurement strategies. Companies that act now and rethink their approach can turn this challenge into an advantage.”

As for how shippers should be thinking about the 25% truck tariff, Marc Schaffer, principal economist, at Breakthrough, said that it adds another element of uncertainty, potentially further prompting them to hold steady, in terms of making decisions related to large capital outlays and, instead, find ways to minimize costs.

“That really is the strategy we're seeing right now in real-time played out, combined with the other thing that we're also noticing as to when rates are going to turn, and when the market's going to turn and also this idea of, ‘how do we also prioritize our long-term carrier relationships for the market when it does turn?’”

Schaffer noted this tariff comes at a time when the heavy-duty OEM truck orders are down and inventories are up, while also noting that, for shippers, especially those with private fleets, the tariffs are likely to have more of a direct impact on replacement rates and also replacement cycles.

“I wouldn't say there's been like a sudden market reaction from the shippers that we've noticed,” he said. “This is just one more piece of the convoluted uncertainty challenge that they are facing.”

A Reuters report stated that the U.S. Chamber of Commerce earlier called on the U.S. Department of Commerce to not to impose new truck tariffs, as the top five import sources are Mexico, Canada, Japan, Germany, and Finland “all of which are allies or close partners of the United States posing no threat to U.S. national security,” it said. The report added that Mexico is the largest exporter of medium- and heavy-duty trucks to the United States, while also citing a study released in January saying imports of those larger vehicles from Mexico have tripled since 2019 to around 340,000 today, based on government statistics.