It appears the two main goals for implementing US trade tariffs: to bring more manufacturing jobs to United States and to negotiate more favorable trade agreements to reduce the trade deficit with the rest of the world, could negatively impact the North American medium and heavy truck market. In 2024, the United States trade deficit was $918.4 billion which was a 17% increase from 2023.
April 9, President Trump paused his reciprocal tariffs on most countries for 90 days. The tariffs for most countries would be reduced to 10% during this period. Canada and Mexico will not be impacted by the 10% tariff for goods trading under the U.S.-Mexico-Canada Agreement. However, tariffs on imported Chinese goods were raised to 145% after the Chinese implemented retaliatory tariffs on goods exported into China from the United States.
Due to concerns about reduced freight, higher up-front truck cost and a general slowing of the economy, a number of fleets are holding off on purchasing new trucks until they can get more certainty on the impact of the tariffs. While there are currently no tariffs of finished medium and heavy trucks imported into the United States from Mexico and Canada, tariffs on aluminum and steel along with the various components will increase the prices of both domestically produced and imported trucks.
The price increases could be in the range of 8% – 10% and are expected to begin as early as May. Freight demand was up sharply in February and March, much of it was attributed to a buy ahead on freight to get ahead of the tariffs. However, there is significant concern about freight demand moving forward as a direct result of the tariffs.
Another issue that is causing market uncertainty is the impact of the phase 3 GHG emission regulations that are scheduled for implementation in 2027 which will add significant cost to the price of new trucks. While the “Transportation Freedom Act” that would eliminate the phase 3 GHG standards is working its way through Congress, it is currently unknown if this law will pass.
The EPA is also reviewing these standards for elimination or a significant re-write of the standards.
Reduced freight demand as a direct result of the tariffs along with the elimination or re-write of the phase 3 GHG emission regulations would likely result in a continued slowing of truck demand for the rest of this year and into 2026 as there would no longer be a need for a truck pre-buy prior to 2027.
Uncertainty in the medium and heavy truck market and the economy in general will remain in place for at least the next two or three months or until the trade issues finally get resolved. PSR
Chris Fisher is Senior Commercial Vehicle Analyst at Power Systems Research
