Last December, the LZBlog covered the potential tariffs put forth by the incoming Trump administration and the possible impacts they might have on the U.S. economy. (Please see our blog from December 18, 2024!) According to some experts, tariffs “are designed to reduce America’s dependence on foreign goods, encourage more companies to manufacture domestically, and address trade imbalances with key trading partners.” As many Americans who are elder millennials and Gen Xer’s remember from Ferris Bueller’s Day Off, though, that’s not always how these import taxes work.
Since December, there has been a lot of back and forth within the White House on what countries should be assigned tariffs, and some countries have been notified of tariffs, only to have the president change his mind a few days later. The trucking industry, as well as many other industries, are still grappling to understand how this will all play out for them. Now that we are more than halfway through the first year of the second presidency of Trump, it is time to pause and consider what tariffs have been implemented and how they have affected the American economy and the trucking industry.
How Were Tariffs Implemented in the Early Part of 2025?
There is no simple answer to the above question. In early spring of this year, President Trump promised tariffs on many places, including an island populated only by penguins. However, other than starting a trend of funny penguin-themed memes, very few of these tariffs were actually put into place. Why? Between uproars from foreign dignitaries and domestic economists, the White House backed down on many of their promised tariffs in favor of attempting to negotiate with countries for better importing and exporting fees. From April until now, the Trump administration has met with many foreign leaders to discuss these rates, including China, the UK, the EU, Mexico, and more.
While some countries have made agreements with the U.S., the most recent being the UK and EU, others are still struggling. Mexico, who had been given an August 1st deadline to make a deal or receive new tariffs, has been offered an extension as their negotiators work hard to make both sides happy. Canada, on the other hand, even as one the U.S.’s top trading partners, has been given a 35% tariff on all goods not part of the USMCA, or United States-Mexico-Canada Agreement. Other countries, such as China, have made few concessions and are still slated to have tariffs raised against the goods the U.S. imports from them. India, due to their continued trade with Russia, has recently been given notice that they will have a 25% tariff on the products they ship to the U.S. The back and forth announcements from the White House have made figuring out what comes next confusing, to say the least. While governments and diplomats try to argue with each other and cajole the U.S. into making these trade deals, what happens with businesses on the domestic front?
The Effects of Tariffs and Potential Tariffs on the U.S. Trucking Industry
The trucking industry is particularly susceptible to the effects of tariffs because “They impact trucking directly, especially when it comes to freight volumes, customer base stability, and operational costs.” What does that mean, though? Since the higher costs of tariffs are passed on to U.S. consumers, higher prices are expected on almost all imports. With customers still dealing with inflation prices, these rising costs are already being felt throughout the U.S. Inflated prices comes with the added issue of lower demand, so many trucking companies are attempting to hold steady to keep from spreading their resources too thin as demand fluctuates around the country. From there, it also means that there will be a reduced number of shipments coming into ports for trucks to pick up and carry to their final destination. Some also say that tariffs disrupt highway and interstate trade routes, causing delays at border crossings which will also result in lower demand. Due to the U.S. consumer being used to quick service when it comes to online ordering, any delay will hurt the customer experience and create issues resulting in the decline of future orders.
The biggest concern for the trucking industry is the ripple effect of tariffs. Disruptions and delays trickle down from ports and warehouses. Trucking companies who are not prepared to weather this storm can find themselves struggling with too much equipment or too many drivers and not enough capital to handle the overflow. Experts from FreightWaves state “that tariffs can harm domestic transportation markets over the short term by shifting sourcing patterns and delaying deliveries,” but these concerns have fallen on deaf ears as the executive branch states that the benefits over the long term will outweigh the brief interruptions in profitability.
Many truck drivers in the industry do not see the possibly impending tariffs as an immediate threat to their jobs. Unfortunately, “the changes could affect their job security and income over time.” Trucking companies may reduce their routes or shorten their miles, and this could lead to driver layoffs throughout the country. Smaller carriers will be particularly vulnerable as they are usually less able to weather the insecurity that tariffs may bring. Tariffs also are usually accompanied by a rise in fuel prices and equipment prices, meaning it will be more expensive to operate a truck in the U.S.
Conclusion
There are some things that trucking companies can do to prepare for any present and future tariffs. According to FCCR, the best preparations are:
- “Diversifying their freight base to reduce reliance on international trade lanes”
- “Staying informed on trade policy update and regulatory changes”
- “Monitoring customer behavior, particularly among importers and manufacturers”
- “Reducing operating costs by improving routing, maintenance, and load efficiency”
- “Building relationships with domestic shippers who are less affected by global market shifts”
Of course, there are other things that can be done as well. While some trucking companies have paused making new truck orders, others are going ahead and buying new trucks to get ahead of potential tariffs. The same goes for replacement equipment. Others see that U.S. consumers are still purchasing at higher rates to get ahead of the holiday season, and these companies are hiring extra drivers to accommodate these orders. The biggest problem is trying to guess what the Trump administration will do next, and, if the last six months has taught the trucking industry anything, it is that there is absolutely no way to do that with confidence.
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Meaghan Goldberg covers recruitment and digital marketing for Lionzone. A Patterson, GA native, after graduating from both Valdosta State University and Middle Tennessee State University, Meaghan joined Lionzone in 2018 as a digital recruitment strategist before becoming the social media manager.
Resources:
https://www.truckingdive.com/news/truckload-ltl-freight-index-q1-2025-td-cowen-afs/753955/
https://www.truckinginfo.com/10235316/how-new-trump-tariffs-could-affect-trucking
