The president didn’t back down from his second import tax deadline with Canada, Mexico, and China. Trucking analysts and trade groups warn of rising equipment prices and operations costs as economists fear recession.
President Donald Trump went through on his threat to levy tariffs against neighbors Canada and Mexico on Tuesday, which trucking industry analysts and executives have warned could push up vehicle prices and redraw supply chains.
Beginning just after midnight on March 4, imports from Canada and Mexico will be taxed at 25%; Canadian energy imports get a 10% tax; and Chinese imports that were levied with a 10% tariff in February, now face 20% duties.
The tariffs add disruption to freight markets, supply chains, and economic health indicators. As the uncertainty around cross-border trade intensified during the early weeks of Trump’s second act, shippers began to expedite their freight. As the freight market is set to rebound in 2025, shippers are also reevaluating their costs but feel somewhat prepared for disruptions.
China has already retaliated by imposing 15% tariffs on various U.S. farm exports. Beijing also added more export restrictions on U.S. companies.
Canada is mulling retaliatory 25% tariffs that Prime Minister Justin Trudeau said would affect more than $100 billion in U.S. products over the next three weeks. Mexico said it would announce retaliatory tariffs on Sunday.
How tariffs impact freight economy
Despite warnings from mainstream economists that a trade war with three of its most important trading partners would stoke higher inflation and slow economic growth, Trump called tariffs a “powerful weapon.”
According to analysts at ACT Research, U.S. tariffs on North American trading partners could increase Class 8 truck prices up to 10%. It would also impact the busy auto hauling sectors that move vehicles and components across southern and northern borders.
ACT economists also believe that the 25% import taxes could cripple the Mexican and Canadian economies. “The U.S. economy will not come out unscathed,” Ken Vieth, ACT Research president, said during his firm’s Market Vitals seminar in late February.
American Trucking Associations sympathized with the motives behind Trump’s tariffs but warned the taxes could devastate trucking.
“President Trump has rightfully placed an emphasis on tackling these challenges, and the trucking industry is committed to being a part of the solution,” Chris Spear, ATA president and CEO, said.
However, he continued, “Imposing border taxes on our two largest and most important trading partners will undo this progress and raise costs for consumers. The 100,000 full-time hardworking truckers hauling 85% of the surface trade in goods with Mexico and 67% of the goods traded with Canada will bear a direct and disproportionate impact.”
Along with reducing cross-border freight, tariffs increase operational costs, Spear noted. ATA said new heavy-duty truck prices could jump up to $35,000. Spear called it “a $2 billion annual tax and putting new equipment out of reach for small carriers.”
Other trucking organizations spoke out against Trump’s tariff plans in February, including the Canadian Trucking Alliance and Motor & Equipment Manufacturers Association.
Business and consumer concerns
The threat of tariffs also harmed U.S. consumer confidence. The Conference Board’s Consumer Confidence Index plummeted to an eight-month low in February—the largest one-month drop since August 2021—attributed in part to tariff threats and inflation worries.
Major stock market indicators also plummeted on Monday and fell during overnight trading. Valuations of the Dow Jones Industrial Average fell 1.48%, the S&P 500 fell 1.76%, and the Nasdaq Composite fell 2.64%, according to CNN.
The business community broadly opposes tariffs. According to a recent IndustryWeek survey over half of respondents view Trump’s performance negatively, with emphasis on his tariff policy.