President Donald Trump’s plan to impose 25% tariffs on goods imported from Mexico and Canada has many trucking executives worried.
One of the chief concerns is the tariffs’ effect on equipment costs. Many tractors, trailers and other transportation equipment are imported into the United States, and the tariff tax could put upgrades out of reach for many companies since more than 40% of Class 8 trucks are imported from Canada or Mexico.
Adding to the uncertainty is the delay in the imposition of the tariffs from March to April. Trump has said the tariffs will be implemented in April.
Renowned investor Warren Buffett of Berkshire Hathaway said in a recent television interview that tariffs are “an act of war, to some degree. … Over time, they are a tax on goods. I mean, the tooth fairy doesn’t pay them.”
For truckers, it is less about war and all about finances.
“The uncertainty regarding tariffs is disrupting, if not stifling, decisions for our customers and companies,” said John Culp, president of Maverick USA in North Little Rock and chairman of the Arkansas Trucking Association. “A 25% tariff will impact our businesses, and I see no way it will not lead to inflation. For example, right now we don’t know what the tariffs will be and we are not ordering tractors until we know, and if it is 25% we will not order any this year.
“It is simply not cost-effective. If they are put into effect for a sustained period, I think it could push us into a recession. Hopefully, that won’t happen, but you can see what the uncertainty has done in the stock market. Fair trade is not a bad thing, but a trade war with Mexico and Canada is.”
One of the reasons that Trump has cited for tariffs is to combat the flow of fentanyl into the country. The American Trucking Associations, in response to Trump’s tariff proclamations, said it supported the goal of eliminating the drug trade.
“As we work to make our communities stronger and safer, we must also avoid unintended consequences that could exacerbate another one of Americans’ top concerns: the high prices for goods and groceries,” ATA CEO Chris Spear said March 4. “With the success of USMCA [the United States-Mexico-Canada Agreement] and the growing trend of nearshoring, the North American supply chain has become highly integrated and supports millions of jobs. Imposing border taxes on our two largest and most important trading partners will undo this progress and raise costs for consumers.
“The longer tariffs last, the greater the pain for truckers as well as the families and businesses we serve.”
Spear said the tariffs could increase the cost of a new truck by as much as $35,000. That would be a hit to a small trucking company, and about 90% of over-the-road trucking companies operate 10 or fewer trucks.
“Hits us both hard,” said Culp, whose company runs 1,600 tractors and trailers. Not only will tariffs reduce cross-border freight, but they will also increase operational costs. A $35,000 increase in the cost of a new truck would amount to a $2 billion annual tax.
Doug Voss, a supply chain and logistics professor at the University of Central Arkansas in Conway, said tariffs aren’t a case of good or bad, although they are generally “negative for trucking.” Tariffs can increase costs of goods, increase the costs of trucks and equipment and disrupt the supply chain, especially in the auto industry.
“On the positive side, in the longer-term, tariffs will cause manufacturing to return to the United States, which is positive for trucking as there will be more demand to haul both inbound and outbound goods,” Voss said. “We just don’t know how much manufacturing will be reshored/near-shored or for which products.”
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