Trump tariffs: 'Nobody likes this level of volatility'

“Nobody likes this level of volatility,” Dean Croke, principal analyst for DAT Freight & Analytics, told FleetOwner. “That’s what I think most of us are concerned about: that all of this market volatility just means that any chance of the market recovery in the second half of the year has kind of disappeared.”

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Sweeping metal tariffs

Aluminum and steel products in the U.S. could soon become much more expensive.

Trump followed through on his promise to issue sweeping 25% tariffs on steel and aluminum imports from any country.

The import fee echoes Trump's first term. In March 2018, Trump issued a 25% tariff on all steel imports and a 10% tariff on all aluminum imports, later carving out special exemptions for countries. According to the International Trade Commission, following the 2018 metal tariffs, steel prices skyrocketed, steel imports shrank 17%, and domestic production grew only 5%. Aluminum imports shrank 19%, while domestic production grew by around 11-22%.

Other countries retaliated against the U.S. for Trump's aggressive trade policies. The European Union announced a $28 billion countermeasure against U.S. goods, set to take effect in April. The EU took similar countermeasures against Trump's 2018 metals tariffs.

Depressed demand for key industries

According to Avery Vise, VP of trucking for FTR Transportation Intelligence, the current tariff environment will likely introduce inflation and reduce freight demand for many key trucking segments.

“The people who support tariffs think that this will lead to greater domestic production—and yes, if that were to happen, we would see a big benefit for trucking,” Vise told FleetOwner. “But the things that have to fall into place for that to happen are almost fanciful. They just aren’t going to happen … It’s likely that the overall picture is going to be just more expensive products, which are likely to depress demand.”

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Vise pointed to four major industries tied to trucking where tariffs could harm freight demand: Automotive, metals, lumber, and food.

“I think automotive is clearly the biggest one overall because of just how many inputs go into it,” Vise said. “There’s this real symbiotic and integrated connection between the U.S. and Mexico and the U.S. and Canada when it comes to the automotive sector.”

In the automotive sector, components cross borders multiple times for several steps of the assembly/manufacturing process. The automotive sector generates about a fifth of dry van traffic, Vise said, while the steel and aluminum behind the sector are also a massive source of volumes for flatbed hauls.

The trade war is also putting food and beverage goods in the crosshairs. For price-sensitive goods like those that Mexico exports, it could mean reduced traffic at the southern border.

“Food is a big part of the northbound traffic from Mexico,” Vise said. “That is potentially at risk, especially since food is much more subject to price sensitivity.”

Some foods are more vulnerable to price changes. Foundational foods like eggs enjoy consistent demand despite skyrocketing prices, while demand for foods like avocados are highly sensitive to price changes. Avocados are one of Mexico’s top produce exports and among the products still targeted by Trump’s tariffs. Retaliatory tariffs could further harm demand for hauling food.

Depressed freight demand

The tariff threats since Trump was elected pushed shippers to move goods early before the taxes took effect. Heightened demand to build inventories raised spot rates for many cross-border hauls and moved peak shipping seasons earlier.

FTR’s and DAT’s analysts expect the early inventory buildup will mean weaker freight demand could follow later this year.

“As we’ve been telling people for months now: what goes up is going to come down,” FTR’s Vise said. “Any surge you get due to the tariffs is going to be offset, because the reason for doing that is to build inventories.”

Earlier forecasts suggested that freight demand would likely rise throughout the year, bringing much-needed upward pressure on carrier rates by the end of the year. Now, a rate upturn might come later than many hoped.

“It means we’re going to have a pretty flat Q3, Q4 peak shipping season,” DAT’s Croke said. “It’s inevitable that we’re going to see pretty flat freight volumes for the rest of the year, and it makes the 2026 prediction from last year being the recovery year more likely … I suspect that pricing power will shift back toward  shippers in the short term because carriers are going to have to try and keep volume.”

Early inventory buildup is not the only factor that lowers freight demand. Trump’s hostile behavior with key trade partners means that its neighboring countries might not be so eager to trade with the U.S. With the country jettisoning its favor and trading power with partners, freight demand and linehaul rates could suffer further.

“I think the damage has been done north of the border,” Croke said. “There is no question that Canadians have taken this personally and are already looking to find other markets for their products.”

What will Trump’s tariffs do next?

It is impossible to predict precisely what Trump, Canada, or Mexico will do next as the trade war intensifies.

“The uncertainty is the real issue,” Croke said. “Who knows? We don’t know whether the tariffs are going to be a particular percentage and when they’re going to be implemented, if implemented at all.”

The unpredictability is clouding business decisions and pushing down economic confidence. Vise, however, predicts some carve-outs for automotive are likely under the next tariff shakeup.

“I would not be surprised at this point, if we do get another tariff on April 2, that there might be some carve-out,” Vise said. “I do not see, especially for the automotive industry, that the scenario we were going to have March 4 comes back in April. I don’t think that’s a tenable position for the Trump administration to take; there are simply too many jobs and too big a piece of the economy at stake.

“These tariffs are supposed to be temporary,” Vise continued. “They’re based on, supposedly, drug tracking and on illegal immigration.”