Why Trump’s tariffs spell bad news for trucking’s recovery

“As the trucking industry recovers from a years-long freight recession marked by low freight volumes, depressed rates, and rising operational costs, we have concern that tariffs could decrease freight volumes and increase costs for motor carriers at a time when the industry is just beginning to recover,” said Chris Spear, president and CEO of the American Trucking Associations. “A 25% tariff levied on Mexico could see the price of a new tractor increase by as much as $35,000. That is cost-prohibitive for many small carriers, and for larger fleets, it would add tens of millions of dollars in annual operating costs.

See also: Canada strikes back at Trump tariffs

The president also threatened more severe taxes on the nations’ imports if either of the countries enacted retaliatory tariffs. Canada and Mexico have already vowed to enact retaliatory tariffs. If neither party backs down, a severe trade war could further hinder the freight market.

What the tariffs charge

Trump’s announcement promises a broad 25% tariff on imports from Canada and Mexico and an additional 10% tariff on imports from China. Energy goods from Canada have the exemption to only face a 10% tariff.

Not all items from the countries will suffer tariffs, though the exemptions are not yet clear. More information on the U.S.’s tariffs will likely be available in the Federal Register later this week.

No de minimis treatment

In his announcement against Canadian imports, Trump also refused to allow a de minimis exemption for the tariffed goods. This de minimis refusal may also affect Mexico’s and China’s goods.

De minimis, Latin for “minimal things” or “with trifles,” normally allows U.S. Customs and Border Protection to ignore articles worth less than $800. Refusing de minimis would lead to a spike in Customs workloads, further slowing cross-border shipments.

Trucking industry calls for end to tariffs

Canada, Mexico, and China are the nation’s top three trade partners by value.

With the Mexican and Canadian tariffs, trucking is the most substantially affected transportation market. The conflict could stall growing cross-border trade with Mexico and Canada as nearshoring trends face headwinds.

See also: Fleets Explained: Cross-border operations

Many industry groups denounced the budding trade war.

“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.,” ATA’s Spear said. “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.”

The Canadian Trucking Alliance is also calling for an end to the trade conflict.

“This has gotten out of hand,” said Stephen Laskowski, CTA president. “The reality is the tariffs are unreasonable are out of proportion to the problem. The tariffs are like taking a sledgehammer to crack a nut.”

The Motor & Equipment Manufacturers Association also criticized the potential effects of the tariffs.

“Such tariffs would have severe consequences for the U.S. vehicle supplier industry, jeopardizing American jobs, increasing costs for consumers, and undermining the highly integrated North American supply chain that is critical to U.S. competitiveness,” the association said. “A 25% tariff would significantly increase the cost of essential vehicle components, with those added costs inevitably passed down to consumers.”

IndustryWeek’s Robert Schoenberger shares other industry associations’ statements on the tariffs, including the National Association of Manufacturers, United Auto Workers, and more.