The 25% tariffs proposed by Donald Trump’s administration in the United States (US) on imports from its trading partners, Mexico and Canada, would affect a third of commercial vehicle sales in the country, according to a study published by S&P Global Mobility.
On 1 February, the US announced new 25% tariffs on imports of nearly all goods, including cars and trucks.
The implementation date for these new tariffs, initially set for 4 February, was paused by President Trump after discussions with his Mexican and Canadian counterparts and has now been postponed to 4 March.
The impact of these tariffs on the road transport industry could be significant, with the potential to depress truck volumes in the short term and, over time, reshape commercial vehicle manufacturing, the study indicates.
S&P Global Mobility highlights that the tariffs are particularly sensitive for the medium and heavy commercial vehicle (MHCV) sector, which supplies trucks and buses within the gross vehicle weight (GVW) classes 4 to 8, or over 14,000 pounds.
Since the establishment of the United States-Mexico-Canada Agreement (USMCA) and the previous North American Free Trade Agreement (NAFTA), the proportion of commercial trucks imported from Canada and Mexico into the US has more than doubled and now accounts for nearly a third of the country’s new vehicle demand.
Furthermore, exposure varies significantly depending on vehicle type and brand.
While more than 40% of class 8 heavy-duty trucks sold in the US are imported from Canada and Mexico, just over a quarter of those in the lighter classes 4 to 7 come from these countries.
The lowest proportion of all is for imported buses and motorhomes, at less than 5%.
Regarding brands, links to manufacturing plants in Canada and Mexico also vary widely.
At the extremes are Ram (with 100% production in Mexico) and Volvo (with 0% production in Mexico).
Many other brands fall somewhere in between, with production facilities in two or even all three North American countries.
SUPPLY CHAIN DISRUPTIONS DUE TO TARIFFS
The report indicates that US commercial vehicle suppliers have little to no capacity to absorb the 25% cost increases imposed on goods from Canada and Mexico, and original equipment manufacturers (OEMs) are only marginally better positioned.
Furthermore, some parts and systems may cross borders multiple times during the production process.
Large-displacement engines for class 8 trucks assembled across all three countries are almost entirely manufactured in the US before being sent to Canada or Mexico for installation in vehicles.
These engines also contain components sourced from neighbouring countries.
While S&P Global Mobility notes that it is difficult to calculate cost impacts across the supply chain, this situation makes price increases for US commercial vehicle buyers likely if the country enforces the new tariffs.
IMPACT OF TARIFFS ON COMMERCIAL TRUCK PRICES
S&P Global Mobility estimates that the net impact of tariffs on new truck prices in the US (MHCV) could be around 9%, after considering the expected depreciation of the Canadian and Mexican currencies and the relative importance of imported vehicles in the market mix.
If these tariffs remain in place until the end of the year, such an increase could reduce demand for new commercial vehicles in the US by up to 17% in the 2025 calendar year, based on historical price elasticity of demand.
This would erase all previously expected growth for the year, resulting in a declining market in 2025 compared to 2024, assuming all other factors remain unchanged.
THE DURATION OF TARIFF IMPOSITION MATTERS
Finally, the study notes that beyond the level of tariffs, their duration is also crucial, which remains uncertain.
Short-term tariffs on the road transport sector, if applied for only a few weeks, could impact prices and profitability.
Furthermore, the transport industry could respond by rescheduling vehicle and parts movements across borders to avoid or minimise tariff impacts.
Tariffs lasting several months or over a year would affect transport industry volumes and could potentially lead to some production shifting from neighbouring countries to the US, through higher line-haul costs and production relocations.
Additionally, tariffs perceived as “permanent” could fundamentally reshape the manufacturing footprint and trade flows.
The MHCV forecasting team at S&P Global Mobility considers a scenario of permanently high tariffs among the three USMCA members unlikely.
Instead, if the 25% tariffs take effect as announced in March, the firm believes their duration will be relatively short, given the upcoming renegotiation of the USMCA trade agreement and the approaching US midterm elections in 2026.
“For now, amid the recent volatility surrounding the enforcement of these tariffs, we maintain a ‘wait and see’ stance in the commercial vehicle forecast.”
“While we have partially factored in the possibility of new 25% tariffs on Canada and Mexico in our Q1 2025 forecast, the introduction of a 25% import duty is not included in our baseline assumptions,” the study concludes.
