MARCH 6, 2025: Uncertainty about President Trump’s plans for tariffs on the United States’ biggest trading partners continues as he postponed tariffs on most products coming from Mexico and Canada.
Trump announced on social media Thursday, March 6, that he would delay tariffs on most goods coming from Mexico for one month, until April 2. Later in the day he added Canada.
The move appears to build on a March 5 announcement of a one-month reprieve on tariffs for the automotive industry on 25% tariffs on Canada and Mexico. That tariff exemption applies to autos imported through the U.S.-Mexico-Canada Agreement, which Trump signed in his first term.
This latest announcement will apply to the vast majority of goods coming from the two countries.
Automotive Industry’s Tariff Exemption
To qualify for tariff-free border crossings under USMCA, a vehicle must contain a certain percentage of parts that were made in North America, or face a 2.5% tax.
The exemption applies not only to Detroit-based automakers, but to any cars from Canada and Mexico that comply with the trade deal, an administration official told The Wall Street Journal.
The WSJ also reported that the president is open to additional tariff exemptions such as those he granted to carmakers.
HDT is working to determine the effect of this on heavy-duty truck production. The American Trucking Associations said the tariffs could make the price tag of a new truck jump by as much as $35,000.
Jed Mandel of the Truck and Engine Manufacturers Association on Thursday morning told HDT that because there are no official documents yet explaining the pause, he could not clarify the impact on trucking.
MARCH 3 UPDATE: President Donald Trump said Monday, March 3, that new 25% tariffs on Canada and Mexico will start Tuesday morning, March 4. The new tariffs could affect trucking in areas such freight volume and the price of trucks and parts.
Unlike last month when there was a last-minute deal to extend the deadline, Trump said in remarks at the White House that there’s no chance of a last-minute deal to stop them.
Mexico and Canada, as well as China, had previously vowed to retaliate with their own tariffs on U.S. goods. And in fact Canada countered with a 25% tariff on an immediate CA$30 billion in U.S. goods, with another CA$125 billion in additional goods tariff planned to come in force 21 days later. Canada had also held off on those tariffs in February, but has implemented them as of March 4 as well.
The president has said the tariffs are meant to pressure Canada and Mexico to stop the flow of drugs and migrants into the U.S. But they could hurt businesses that depend on international supply chains and could mean higher prices and inflation.
Tariffs and the Economy
Businesses and investors have expressed concern about the effects of tariffs on the U.S. economy. Other countries don’t actually pay the tariffs; they are a fee paid by the companies importing the goods. Importers will pass costs on, likely resulting in more inflation.
The Conference Board nonpartisan think tank noted that together, goods from Canada, Mexico, and China make up 41% of U.S. imports. The tariffs will have a significant impact on U.S. grocery items, consumer packaging and building materials, automotive vehicles and parts, electronics, and manufacturing inputs including critical minerals.
As part of an interview with CBS, investor Warren Buffet called tariffs “an act of war, to some degree….Over time, they are a tax on goods. I mean, the Tooth Fairy doesn’t pay ’em!”
Simply the uncertainty itself has had an effect on businesses. The Trade Policy Uncertainty Index has skyrocketed.
In a Feb. 27 report, S&P Global Ratings said higher tariffs are a top concern for many U.S. corporations it works with.
“We believe increasingly protectionist trade policies, including materially higher tariffs, would likely result in inflationary pressures through higher prices for consumers and rising input costs for U.S. sectors exposed to imports and cross-border supply chains at a time when they are grappling with already-elevated costs and a more difficult passthrough environment,” said David Tesher, S&P Global Ratings’ head of North America Credit Research.
S&P Global Ratings said the tariffs announced by the Trump administration so far on China, Mexico, Canada, and steel and aluminum will likely affect sectors such as autos, metals and mining, oil and gas, chemicals, retail, pharma and health care.
The National Retail Federation released a statement from Executive Vice President of Government Relations David French:
“The decision to impose tariffs on our North American neighbors and two of our largest trading partners is a significant measure. Unfortunately, it is one that will only hurt hardworking Americans and the businesses that strive to provide customers with the products they want and need on a daily basis.
“Tariffs are just one tool at the administration’s disposal to achieve a secure border, and we urge it to explore other options to accomplish the same goals. As long as these tariffs are in place, Americans will be forced to pay higher prices on household goods.
“We urge the Trump administration and our Canadian and Mexican counterparts to work together to quickly resolve our outstanding border security issues.”
A tariff war risks plunging the world economy into a crash similar to the Great Depression of the 1930s, warned a senior official at the International Chamber of Commerce, which promotes global business and trade, reports the Wall Street Journal.
ATA: Beware Unintended Consequences of Tariffs
The American Trucking Associations released a statement supporting efforts to battle fentanyl and illegal immigration, but said the tariffs could lead to unintended consequences in the form of high prices for goods and groceries.
“With the success of USMCA and the growing trend of nearshoring, the North American supply chain has become highly integrated and supports millions of jobs,” said ATA President & CEO Chris Spear.
“Imposing border taxes on our two largest and most important trading partners will undo this progress and raise costs for consumers.
“The 100,000 full-time hardworking truckers hauling 85% of the surface trade in goods with Mexico and 67% of the goods traded with Canada will bear a direct and disproportionate impact. Not only will tariffs reduce cross-border freight, but they will also increase operational costs.
“The price tag of a new truck could rise by up to $35,000, amounting to a $2 billion annual tax and putting new equipment out of reach for small carriers.”
Long-Term Impact of Tariffs on Trucking Unclear
“With the Trump administration now in place, the trucking industry is eager to move forward, but the landscape is still changing – almost daily!” said Tom Perrone, SVP of Global Professional Services at project44, in an email to HDT.
“What is unclear is the long-term plan for these tariffs and the impact they will have if they persist for an extended time,” he added. “Now is the time to invest in agility and reassure customers that you are ready to respond in real-time to any potential disruptions.”
He recommended planning for multiple possible scenarios with tariffs, predicting that the imposition of taxes and tariffs will incur immediate legal challenges and further delays.
“Additionally, the bi-lateral tightening of border security could have downstream impacts on over-the-road transportation in North America,” Perrone said. “For example, a higher proportion of freight being searched on both sides of the Mexican and Canadian borders could slow the flow of goods and increase transit time.”
Higher Truck Prices
The tariffs will affect trucking imports and exports as well as manufacturing, pricing, profitability and volume, S&P Global Mobility predicted last month.
More than 40% of Class 8 trucks sold in the U.S. are imported from Canada and Mexico, it said.
“Commercial vehicle suppliers in the United States have little or no ability to absorb 25% cost increases imposed on goods from Canada and Mexico, and OEMs are only in a slightly better position,” it said “Moreover, some parts and systems may cross the borders multiple times during the production process.”
S&P Global Mobility estimates that the net impact of tariffs on new U.S. medium- and heavy-duty truck prices could be around 9%.
In a March 4 release, S&P said it sees a 70% probability for a quick resolution, with tariffs in effect only for up to a couple of weeks. In that case, it said there will be some vehicle production lost due to supply issues and border gridlock, and short-term OEM production halts.
It sees a 20% potential for extended disruption. If the tariffs are held in place for a six-to-eight-week duration, they said, it would take a year for the automotive industry to bounce back.
MEMA, The Vehicle Suppliers Association, which also includes heavy-duty trucking suppliers, said in a March 5 statement that the tariffs “have raised profound concerns across the sector placing additional pressure on the already-fragile supplier industry and its ability to operate absorb the costs, businesses, grow and invest.”
A recent MEMA survey found that 82% of suppliers say tariffs on goods from Mexico will have a negative impact on their business, and 68% say tariffs on goods from Canada will harm operations. Suppliers say the tariffs may result in actions such as cutting or delaying investments, modifying supply chains, cutting U.S. jobs, and even shifting production outside of the U.S., especially if they drag on for six months or more.
More Tariffs on the Way
More tariffs loom on the horizon. Trump has said he will implement “reciprocal tariffs,” expected to be announced in early April.
The Wall Street Journal reported on Feb. 27 that in reality, the government can’t flip the switch on those kinds of tariffs overnight. Administration officials told WSJ that it could take up to six months or even more, because it takes time to analyze the tariffs and nontrade barriers of all the nations affected.
Effective March 12, imports of steel and aluminum will be subject to a 25% tariff rate, according to a Trump announcement last month. This is an increase from the previous 10% tariff on aluminum.
The Auto Care Association said these increased tariffs would “have far-reaching consequences beyond the steel and aluminum industries,” said Bill Hanvey, president and CEO, Auto Care Association.
“Vehicle parts, along with countless other downstream industries, depend on a stable supply of raw material to create and provide the countless vehicles parts that keep our families, businesses and economy running,” he said.
“Many specialty steel products used in our industry are not readily available from domestic sources, making access to global supply chains essential.”
February 11 Update: New Steel, Aluminum Tariffs Add to Concerns About Inflation
As President Donald Trump announced tougher tariffs on steel and aluminum imports than he put in place in 2018 during his first term, critics said they could lead to higher inflation.
While the 2018 tariffs on steel had some exceptions and exemptions, the new orders remove those. All steel imports will be taxed at a minimum of 25%. Trump also ordered 25% tariffs on aluminum imports, compared to 10% in 2018.
Canada, the largest source of steel imports, was quick to criticize the new tariffs. And the European Union vowed to take retaliatory action and likely will target motorcycles, jeans, peanut butter, bourbon, whiskey, and other U.S. exports to Europe.
While the president said tariffs will help level the playing field and make U.S. factories more competitive, those tariffs also mean a risk of higher inflation.
While U.S. companies may benefit from the tariffs and be able to charge higher prices, that means higher prices are also likely for anything made with steel and aluminum – such as heavy-duty trucks, components, and truck parts.
Importers Try to Get Ahead of Tariffs
Meanwhile, import levels at the nation’s major container ports are expected to remain high as retailers continue to bring in cargo ahead of the 10% tariffs on China and other potential import tariffs.
Supply chains are complex, explained Jonathan Gold of the National Retail Foundation in a statement about the Global Port Tracker report released Feb. 7 by the NRF and Hackett Associates (before Trump’s announcement of steel and aluminum tariffs).
Gold, NRF Vice President for Supply Chain and Customs Policy, said, “Retailers continue to engage in diversification efforts. Unfortunately, it takes significant time to move supply chains, even if you can find available capacity.”
New tariffs on China and other countries will mean higher prices for American families, Gold said.
“Retailers have engaged in mitigation strategies to minimize the potential impact of tariffs, including frontloading of some products, but that can lead to increased challenges because of added warehousing and related costs. … there will be a significant impact on the economy if increased tariffs are maintained and expanded.”
Retailers have been frontloading imports of key products for several months because of the potential for the East Coast/Gulf Coast port strike in January as well as to get ahead of potential tariffs from President Donald Trump.
Leave a Reply