It could have been worse. Tariffs on heavy-duty trucks are not as onerous as they sound. 

At the outset, we confess that we have never bought a heavy-duty truck or tractor. Therefore, when we suggest that having to pay $10,000 more for a truck is better than having to pay $30,000 more, we realize that you might consider paying even $10,000 more – or paying a higher freight rate due to higher equipment costs – unreasonable.

Of course, that observation applies to much of what analysts do. We often point out that things could be worse without fully appreciating that they might be plenty bad enough now.

Not having a horse in that race, dog in that hunt, or whatever metaphor you prefer is a double-edged sword. Analysts might not appreciate all the day-today ramifications that industry stakeholders face, but we are not distracted by them, either. You get a perspective that might not define your course of action, but it might still be quite valuable.

When we consider the new tariffs on medium- and heavy-duty trucks that take effect this month, we are not addressing whether a tariff is fair or good policy. In our analysis for companies involved in the production of commercial vehicles, we are concerned about what tariffs might mean for the supply chain and how production is distributed.

In the context of the truck freight market, though, we are focused on how much more trucks will cost to build. Of course, that is not the same as what any given truck will cost to buy, which is one reason why our analysis can go only so far. And, of course, how that additional cost might affect for-hire carriers’ freight rates is another unknown.

The Details Make a Big Difference

The possibility of tariffs on heavy-duty trucks has been apparent since April when the Commerce Department launched what is known as a Section 232 investigation into the national security implications of importing trucks and key parts.

So, it wasn’t a huge shock when President Trump announced via Truth Social on September 25 that the U.S. would impose 25% tariffs on heavy trucks as of October 1. Of course, October 1 came and went without any formal tariff announcement. Then on October 6, Trump announced – again on social media – that 25% tariffs on heavy-duty and medium duty trucks would begin November 1.

Still, we didn’t get details until October 17 when Trump issued a proclamation that has since been published in the Federal Register. See https:// www.federalregister.gov/d/2025-19639.

The proclamation laid out the full regime, which is more complicated than simply a 25% tariff on all imported trucks. This was not all that surprising, either, because passenger vehicles had gone through a similar exercise this spring. In that case, the eventual tariff treatment sort of evolved over a period of weeks. That experience clearly informed the Trump administration’s approach to truck tariffs.

For starters, the full 25% tariff on medium- and heavy-duty trucks (Classes 3-8) and key parts for those trucks applies only for products that are imported from countries outside North America or for products imported from Mexico or Canada that do not comply with the United States-Mexico-Canada Agreement (USMCA).

In the case of imported trucks that are USMCA-compliant – apparently the vast majority of trucks imported from Mexico and Canada – the tariff applies only to the non-U.S. content.

Most Class 8 trucks sold in the U.S. are built here. The only country that exports Class 8 trucks to the U.S. currently is Mexico, which accounts for about 37% of the market. Therefore, in practice, the tariff on all imported Class 8 trucks is less than 25%.

The percentage of non-U.S. content in a Class 8 truck built in Mexico presumably varies by make and model, but FTR puts that share at about 35% for all imported Class 8 trucks.

Even Class 8 trucks built in the U.S. will face tariffs on imported key parts – components like engines, transmissions, chassis, and tires. For such parts that are compliant with USMCA, only the non-U.S. content ultimately will be subject to tariffs.

However, no USMCA-compliant parts will be tariffed for now. That tariff is on hold until the Commerce Department and U.S. Customs and Border Protection establish a process to apply tariffs to the non-U.S. content.

In addition to the special treatment for USMCA-compliant products, an offset to the full impact of tariffs is a “no stacking” provision. Products subject to these tariffs will not also be subject to any existing or future sectoral tariffs – the 50% tariffs on steel, aluminum, and copper, for example – or reciprocal country-specific tariffs.

Nor will products covered by the new tariffs be subject to the special tariffs that are imposed on imports from Canada, Mexico, Brazil, or India. However, imports from China currently will face 25% tariffs on top of any other tariffs that might apply.

The “no stacking” provision simplifies the cost analysis because most content in a Class 8 truck will not be tariffed any higher than 25% unless it is sourced from China. However, this provision could change the current cost of a truck.

For example, if a truck currently contains imported steel or aluminum, the tariff rate on that content now will be 25%, not 50%. On the other hand, imports from most countries are subject to tariffs below 25%, so in those cases, the new tariff will raise the cost.

Although trucks built in the U.S. are not immune from tariffs on parts, the new regime offers an incentive to maximize U.S. production even if parts are sourced elsewhere. From 2025 through 2030, each truck and engine manufacturer will receive an offset against tariffs on imported parts equal to 3.75% of the aggregate value of that manufacturer’s trucks or engines built in the U.S.

In essence, manufacturers have the opportunity to erase the potential tariff impact on domestically assembled trucks altogether.

What Does This Mean for Truck Buyers?

By now, you have realized that in practice, the tariff on an imported Class 8 truck will be much lower than 25%. How much lower?

Our analysis above answers that question. Assuming 35% non-U.S. content, a 25% tariff equals 8.75% of the total value of the imported truck.

What does that mean in dollars? Obviously, that will vary substantially by make and model, but we assume a wholesale price of $120,000, resulting in a $10,500 added cost.

Again, this is a broad estimate, but it offers at least a scope on what could be a high-side impact. In reality, though, it seems highly unlikely that purchase prices on trucks will rise by 8.75%.

Truck buyers will almost always be able to purchase a workable alternative that is built in the U.S., so competitive pressures will discipline pricing significantly. In practice, manufacturers probably will adjust pricing to account for the fact that most of their production is in the U.S. At least temporarily, those trucks will face no tariff at all if the parts are USMCA-compliant.

To the extent that competitive pressures discipline pricing, truck manufacturers face financial pressure to increase their domestic production to limit the margin impact. That is, of course, precisely what the tariffs are supposed to encourage.

Remember, though, that truck manufacturers assemble trucks in Mexico because there is a cost advantage in doing so. That means that even with freedom from tariffs, we can expect tariffs to increase the costs of U.S.-built trucks.

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