A significant portion of the purchase price for heavy-duty tractors is made up of fees and taxes, which are set to increase next week.
President Donald Trump announced on his Truth Social platform that starting Wednesday, Oct. 1, the U.S. will impose a 25% tariff on all imported heavy-duty trucks.
Major North American heavy-truck manufacturers operate globally, with assembly plants located in the U.S. and supplementary facilities in Mexico. Under the U.S.-Mexico-Canada (USMCA) free trade agreement, which Trump signed in 2018 and took effect in 2020 to replace NAFTA, these trucks have typically been imported into the U.S. without tariffs. However, recent diplomatic trends indicate this may change soon.
Insufficient Details
The White House did not clarify whether this new tariff would be additional to USMCA arrangements or if trucks would remain tariff-exempt as long as 75% of their materials and labor come from North America. There’s also uncertainty about whether parts will fall under this new tariff, which was a topic during the Bureau of Industry and Security’s Section 232 National Security Investigation earlier this year.
Jason Miller, a Supply Chain Management expert at Michigan State University, expressed confidence that the new tariffs would override USMCA, similar to existing finished vehicle tariffs. Mexico accounted for 71.9% of heavy truck imports by dollar value last year.
Industry Reactions
Trump presented the tariffs as protective measures for American truck manufacturers against external pressures and beneficial for truckers’ financial stability. However, various industry stakeholders, including the American Trucking Associations and major manufacturers, opposed these tariffs during the recent Section 232 investigation.
With limited follow-up information from the Trump administration, manufacturers like International Motors, DTNA, and Volvo Group are currently waiting for more specifics on the implementation of these tariffs. A Paccar spokesperson, the only major manufacturer to support the tariffs, expressed eagerness to review the details as they become available.
Cost Implications
Research from the American Transportation Research Institute (ATRI) indicates that the average price for new Class 8 trucks has surged by $40,000 between 2014 and 2023, now exceeding $170,000. With the addition of the new 25% tariff, the total cost could reach $212,500, and with a 12% Federal Excise Tax (FET), this would total approximately $238,000—$68,000 from taxes and new fees alone.
Miller stated that U.S. truck production faces challenges due to low order intake and existing tariffs on materials like steel and aluminum, making it improbable for OEMs to simply shift assembly back to U.S. plants to avoid the new tariffs. The current dynamics suggest that truck buyers will soon experience a significant rise in equipment costs.
Potential Short-Term Sales Spike
FTR’s Vice President of Trucking, Avery Vise, indicated that a temporary boom in truck sales could occur as fleets strive to acquire trucks before the tariffs are enforced. Though manufacturers operating in Mexico could shift some production to the U.S., this would likely incur additional costs, potentially passed on to buyers. In a stronger market, this price volatility could lead to swift inventory purchases, emphasizing the urgency for fleets needing to update their equipment.
