Trucking's Tariff Trap: How Trade Wars Could Prolong the Freight Recession

The U.S. trucking industry, already mired in a two-year freight recession, now faces fresh headwinds as global tariff policies reignite uncertainty and strain an already fragile supply chain. From border-crossing bottlenecks to soaring equipment costs, the interplay of trade disputes and policy volatility has left carriers scrambling to adapt. For investors, the path forward hinges on whether tariffs will ease—or if they signal a prolonged downturn.

The Tariff Tsunami: Costs and Chaos

The Trump-era playbook of tariffs is back with a vengeance, this time targeting Canadian and Mexican steel and aluminum at 25%, and Chinese goods at 10%. These measures, echoing the 2018 trade wars, have sent shockwaves through the trucking sector. American Trucking Associations (ATA) Chief Economist Bob Costello estimates tariffs could add $25,000–$35,000 to the cost of a new Class 8 tractor, pricing smaller carriers out of equipment upgrades.

Cross-border routes, vital to North American trade, have become battlegrounds. TFI International, a major player in U.S.-Canada-Mexico logistics, warned of being “hit on both sides” by tariff threats. reflects this strain, with all three trucking stocks underperforming the broader market as tariff uncertainty drags on.

Freight Demand: A Volatile Rollercoaster

The immediate impact of tariffs has been erratic. Shippers frontloaded imports ahead of duties, spiking freight volumes in late 2024 and early 2025—particularly on transpacific routes. But this surge is a mirage. Dean Croke of DAT Freight & Analytics warns that tariff-driven inflation will “dampen consumer demand,” leading to a post-tariff slump. Canadian and Mexican cross-border freight volumes, already down 5% year-over-year, could face further declines as industrial production slows.

Landstar System’s CEO Joe Beacom sums up the dilemma: “Carriers reliant on border routes are straddling a knife’s edge.” The ATA’s 2024–2035 forecast predicts a mere 1.6% truck tonnage growth in 2025, a stark contrast to the sector’s usual 3–4% annual expansion.

Cost Pressures and Operational Squeeze

Rising costs are forcing carriers to make tough choices. Small firms like K&J Trucking are delaying tractor replacements from four to five years, while giants like Knight-Swift focus on squeezing productivity from existing assets. Revenue per driver has become a lifeline metric, but margins remain thin.

Spot market rates briefly surged as shippers sought flexibility, but this benefit is uneven. “Some drivers saw temporary gains, but capacity imbalances are worsening,” notes Costello. Meanwhile, Red Sea diversions due to Houthi attacks have added days to shipping routes, further straining inland trucking networks.

Adaptation Amid the Storm

Carriers are turning to technology to survive. AI-driven tools from Grand Island Express to D.M. Bowman are optimizing routes, predicting maintenance needs, and cutting paperwork. Transflo Workflow AI adoption among small carriers has surged, reducing administrative costs by 20–30%.

Strategic shifts are equally critical. TFI International is pausing acquisitions to focus on operational efficiency, while Landstar bets on contract freight to stabilize revenue. The ATA’s long-term outlook, however, is cautious: truck tonnage may hit 14 billion by 2035, but only if tariff “taxes” are repealed.

The Road Ahead: Policy as the Pivot Point

The freight sector’s fate now rests with policymakers. Costello argues that tariffs function as a “regressive tax,” eroding consumer spending power and prolonging the recession. With U.S. industrial production flatlining and services outpacing goods demand, carriers face a perfect storm of weak freight volumes and rising costs.

A glimmer of hope exists if trade tensions ease. A potential ceasefire in the Red Sea could cut transit times, while a Trump administration reversal on tariffs might allow a gradual recovery. Until then, trucking stocks remain in limbo.

Conclusion: Stuck in Neutral

The trucking industry’s freight recession is not just cyclical—it’s structural. With tariffs driving up costs, stifling demand, and destabilizing trade routes, carriers are caught in a vise. reveal a stark divergence: while industrial output stagnates, freight costs climb.

Investors should brace for prolonged weakness unless policymakers act. As Costello warns, “This isn’t 2018 déjà vu—it’s a deeper crisis.” Without resolution, the road to recovery will be long and bumpy.