Trucking, retail, and port leaders sound alarm regarding tariff impact on U.S. economy

Amid all of the tariff-related tumult seen in recent days—and, to be clear, there has been a lot of it—there has been no shortage of feedback from various industry leaders about the potential impact these tariffs can have on a whole host of things, including: economic conditions; import levels; and supply chain operations, among many others.

In looking at respective comments issued by leadership in various modes, one common theme expressed focused around concerns relating to how the usage of tariffs can directly translate into increased costs, coupled with tariff actions having the high potential of negatively impacting supply chain stability and also resilience, two things which were impacted following the pandemic.

American Trucking Associations (ATA) President & CEO Chris Spear explained that as the trucking industry continues to recover from the lengthy freight recession, replete with low freight volumes, depressed rates, and increasing operational costs, the ATA is concerned that tariffs could decrease freight volumes and increase costs for motor carriers—at a time when a recovery is starting to see signs of a recovery.

“A 25% tariff levied on Mexico could see the price of a new tractor increase by as much as $35,000,” said Spear. “That is cost-prohibitive for many small carriers, and for larger fleets, it would add tens of millions of dollars in annual operating costs. Trucks move 85% of goods that cross our southern border and 67% of goods that cross our northern border, supporting hundreds of thousands of trucking jobs in the U.S. The trucking industry understands the crises motivating these tariff proposals, which is why we have been a leader in efforts to fight drug and human trafficking. We firmly support policies that will secure our borders and protect legitimate trade, but we also recognize the unintended consequences that substantial tariffs could have over the long-term, including higher consumer costs on the wide range of goods that cross our borders by truck, including food, automobiles, televisions, computers, furniture, and other key manufacturing inputs.
 
On a separate but related note, Spear pointed to the United States-Mexico-Canada Agreement (USMCA) as a major achievement of President Trump’s first administration, with the ATA working closely with all three countries to reach deal, adding that ATA looks forward to doing so again during the USMCA review.

Regarding how tariffs can impact ports, Cary S. Davis, President and CEO, American Association of Port Authorities (AAPA) was blunt, saying tariffs are taxes.

“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,” said Davis. “Instead, we call 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.”

From the perspective of shippers, Steve Lamar, President and CEO, American Apparel & Footwear Association (AAFA), explained that tariff actions on Mexico, Canada, and China have the potential to inject massive costs into what he called an inflation-weary economy and expose the U.S. economy to a damaging tariff war that can negatively impact key export markets needed by U.S. farmers and manufacturers.

“We should be forging deeper collaboration with our free trade agreement partners, not taking actions that call into question the very foundation of that partnership,” said Lamar.

And AAFA Senior Vice President of Policy Nate Herman said that amid high inflation, this is not the time to add new costs on the U.S. supply chain, noting what is needed instead is trade relief and a commitment to smart trade policy and strong trade partnerships.

National Retail Federation (NRF) Executive Vice President of Government Relations David French said it supports the White House’s goal of strengthening trade relations and creating fair and favorable terms for America.

“But imposing steep tariffs on three of our closest trading partners is a serious step,” observed French. “We strongly encourage all parties to continue negotiating to find solutions that will strengthen trade relationships and avoid shifting the costs of shared policy failures onto the backs of American families, workers and small businesses. The retail industry is committed to working with President Trump and his administration to achieve his campaign promises, including strengthening the U.S. economy, extending his successful Tax Cuts and Jobs Act, and ensuring that American families are protected from higher costs.”

While these stakeholders approach the supply chain with different perspectives, one common theme they share is that tariffs need to be carefully evaluated, with a focus on both the short- and long-term effects, given that a general consensus in logistics circles is that tariffs are almost certain to not only raise costs but also increase the costs of doing business for shippers and carriers alike.

Given the stop-and-go nature of how tariff announcements—and a subsequent 30-day pause on U.S. tariffs placed on Canada and Mexico, this is a topic that is not going away anytime soon. Are they going to be used as a tool to increase U.S.-based manufacturing and sourcing and quell the flow of fentanyl into the U.S. and reduce border crossings or are they simply a negotiating tactic for President Trump to get what he wants from these respective countries? That remains to be seen.