What Trump’s Tariffs Mean for the Trucking Industry

If you have been following even the slightest bit of political news, you have probably heard that Donald Trump is going to be placing tariffs on Canada, China, and Mexico. What does this mean?

Quick Rundown on Tariffs

A tariff is a tax imposed on imported goods to serve two purposes: additional revenue for the government and to promote domestic production.

Goods that incur a tariff either have to take a profit cut or increase prices, which reduces demand. If a car costs $15,000 to make in Mexico, adding a 25% tariff to it will make the cost $18,750. All other things being equal, a car made in the USA at the same price could sell at $18,750 and make a profit, while a car from Mexico would not.

So what does this mean for the trucking industry?

Fewer Imports

The basic economic law of supply and demand would come into place. Because higher prices would mean a lower demand for goods, fewer goods will be coming in from overseas. Ports such as the ones found in Los Angeles and Long Beach would see lower traffic, which would have a silver lining for truckers: they would not have to wait as long for port operations to handle processing to get the trucks back on the road because there would be less clutter on the ocean.

Domestic Production

With domestic production having a competitive edge over foreign production, businesses may move operations back stateside, needing raw materials to come to facilities and finished goods to leave the facilities to go to stores. Who would deliver them? Trucks, of course! This would result in a more centralized network of shipping across the nation’s highways: rather than having to deliver goods from either coast towards the center, travel distances could instead be reduced by hundreds of miles.

Conclusion

As with most things regarding economic policy, there are tons of implications in any decision made. Most economics experts agree that a change in foreign tariffs like this would take months to truly take effect, as producers across the ocean still want to sell the products they have already made. Likely, this shift from foreign to domestic production will not be seen until the holiday season of 2025.

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