Impact of Truck Tariff on Dealers
President Donald Trump’s proposed 25% tariff on medium- and heavy-duty trucks is causing varied reactions among dealers, with some rushing to place orders while others maintain their usual operations.
Details of the Tariff
The tariff, expected to be implemented on November 1, targets trucks over 10,000 pounds, adding yet another difficulty to a market already struggling with low demand amid a prolonged freight recession.
Dealer Reactions
Reflecting the lack of strong demand, over 60% of truck dealers surveyed noted a decline in orders in the third quarter compared to last year, with not a single dealer reporting an increase. According to heavy-equipment research firm IronAdvisor Insights, around 50% of those surveyed indicated weakening demand for new trucks, while less than 15% saw improvement.
Ordering Strategies
In light of potential price increases due to the tariff and existing supply chain issues, some dealers are preemptively ordering hundreds of trucks. However, this strategy may come with risks, as some fleet operators are halting their orders after the tariff announcement, as noted by a freight company executive in the report.
Customer Perspectives
For certain dealers, discussions about the tariffs are minimal with customers, according to Peter Spitzer, a commercial and fleet account manager at DuPratt Ford Dixon. He stated that customers are primarily focused on evaluating payment options and researching reliability, capability, and affordability, rather than being overly concerned about the tariffs.
Potential Exemptions
There is also some optimism that foreign original equipment manufacturers (OEMs) may negotiate exemptions with the Trump administration, allowing certain products to be spared from tariffs in return for promises of domestic production.
Navigating Price Increases
As of October 6, the average price of a new truck had reached $194,950, marking a 16.2% increase month-over-month, according to Equipment Finance News. While price hikes linked to the tariff are likely, dealers can assist customers in finding ways to reduce operating costs. Spitzer emphasized the importance of discussing overall expenses with customers, including offering maintenance plans that may help lock in current rates.
