Tariffs are one of the most significant—and unpredictable—developments for the U.S. economy in 2025. From confused rhetoric to dramatic flip-flops, President Donald Trump’s trade war is threatening and opaque.
Trade tensions between the U.S. and China temporarily cooled down on May 12, when Trump lowered broader tariffs from roughly 145% to 30% (with many exceptions). The tariff reduction only lasts 90 days until August 12, when it would be replaced by another trade deal or further escalations. Trump also reached a minor deal with the United Kingdom, reducing tariffs on some imports of automobiles, steel, and aluminum.
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Despite these deals, the U.S.’s global trade environment is still more hostile than it was a year ago. The most significant tariff policies in effect, as of late May, are:
- Most imports today face a baseline 10% ad valorem fee.
- Many automobile and auto parts imports (for passenger vehicles and light trucks) face a 25% tariff.
- Many aluminum and steel imports, and derivative products, face 25% tariffs.
Canada and China responded to the trade barriers with similar measures against U.S. exports:
- Canada introduced 25% tariffs on U.S. vehicles and at least $60 billion worth of other U.S. exports.
- China maintained a 10% baseline tariff on U.S.-origin goods and 15% tariffs on many agricultural and energy products.
The duties mean significant costs for U.S. companies and consumers, raising inflation and broadly reducing demand.
Trade tomorrow
Despite the harsh environment, the administration could still raise duties for imports from certain countries or industries.
Trump’s postponement of higher “reciprocal tariffs” was written to last 90 days, resuming on July 8. Treasury Secretary Scott Bessent confirmed on May 18 that the administration may resume its reciprocal tariffs against an unspecified set of countries.
Notable reciprocal tariffs announced in early April included a 20% duty on imports from the European Union, 46% on Vietnam, 24% on Japan, 26% on South Korea, and more. The European Union threatened significant tariffs against U.S. goods if Trump’s reciprocal tariffs take effect.
The Trump administration may also follow its previous threats to issue tariffs on aircrafts, copper, electronics, lumber, movies, oil, pharmaceuticals, minerals, and heavy-duty trucks and truck parts.
But anything is possible. With the state of tariff uncertainty so far, companies cannot fully trust the administration’s threats, suggestions, or official announcements.
Grim predictions
Industry analysts shared negative predictions for the impacts of tariffs on freight demand and pricing.
DAT Freight & Analytics predicted tariffs’ economic distortions will disrupt capacity and weaken carriers’ pricing for at least several months. FTR Transportation Intelligence in May predicted an overall negative impact from tariffs, forecasting volumes imported from Asia will decline into 2026, while truck prices will likely rise. Class 8 truck demand plummeted following Trump’s early April tariff announcements, FTR noted: New truck orders in April reached their lowest counts since May 2020.
The Port of Los Angeles predicted a significant pullback on global trade for 2025, leading to lower import/export volumes, reduced consumer demand, and significant layoffs among both ports and retailers.
Meanwhile, the industry’s largest public companies have either scrapped or reduced their earnings predictions during their first quarter earnings reports. Some companies that lowered their predictions included FedEx, Knight Swift Transportation, Volvo Group, and General Motors. Companies that gave up sharing forecasts altogether included UPS, Cummins, Ford, and more.
Many macroeconomic trends are projecting doom and gloom for 2025 and beyond: The Federal Reserve is making fewer rate cuts than it originally planned; the country’s credit rating fell to a historic low; and consumer confidence is at a near-record low.
Though uncertainty and pessimism abound, many parts of for-hire trucking remained healthy throughout April, including freight demand and spot market pricing. However, analysts from DAT and FTR warn, many of those boons may have merely come from temporary tariff disruptions, including a rush to build inventory.
For regular updates on tariffs and how they impact our industry, visit fleetowner.com/tariffs.
