As a trade war between the U.S. and other countries continues, shippers could soon see tariffs impacting cross-border trucking. Over the last few months, President Trump has announced various tariffs on goods coming into the U.S. from different countries. While some have already started including a steel and aluminum tariff, others will begin in the coming weeks. Some of the reasons behind the taxes are to reduce international trade imbalances, address drug trafficking, and prevent illegal immigration. Due to the number of supply chains that rely on importation, international and domestic shipping will feel the impact. While the tariffs will influence cargo movement in the U.S., they will also affect cross-border trucking.
How Are Tariffs Impacting Cross-Border Trucking?
Canada and Mexico are the primary countries impacted by Trump’s tariffs and are popular for cross-border trucking with the U.S. Nearly 78% of Canada’s exports and 83% of Mexico’s exports go to the U.S. Due to the amount of goods shippers move between the countries, tariffs will significantly impact trade. When Trump announced the tariffs, short-term freight demand rose as shippers rushed to beat the enforcement date. As a result, higher volumes led to longer cross-border transport times. The president of Estes Express Lines, Webb Estes, recently noted, “One of the things that we’ve experienced is longer delays at all the border crossings across Canada, and even slowdowns into Mexico.”
After the initial rise in volume, importers could see a reduction in freight demand as costs rise. Analysts report that tariffs could increase inflation by $1,000 to $1,200 per shipper. Lower demand will directly affect trucking companies by tightening profit margins. While it may negatively impact cross-border transport, it could positively affect domestic shipping. One of President Trump’s goals behind the tariffs is to bring manufacturing back to the U.S. to boost the economy. Manufacturers will have a greater need for trucking to move the finished product to the final location.
What Could This Mean For The Shipper?
The most significant impact shippers will see is higher costs for cross-border trucking. For supply chains shipping to markets, the price could fall on the customer. Shippers have already begun finding strategies to mitigate potential disruptions and rising expenses. An example is breaking down shipments into smaller components only to pay duties on tariff-affected goods. Another step shippers are taking is rerouting importations to different countries and using other conveyance methods. However, issues could arise from extending delivery times and moving operations to other locations. Supply chains under the USMCA (United States-Mexico-Canada Agreement) have already begun reassessing sourcing strategies due to recent steel and aluminum tariffs affecting the automotive industry in those countries.
While tariffs could cause disruptions in shipping goods by truck, they should not stop cargo movement. A shipper must, however, take steps to mitigate delays, cargo loss, and higher costs. Along with planning and being current with the news, you can do this by speaking to a freight broker. Brokers are the intermediary between shippers and carriers and coordinate freight transport on behalf of the shipper. They do this by having a network of carriers to move your goods. Brokers also handle various parts of the logistics process, including negotiating rates and providing documentation. Contact A1 Freight Solutions at 786-375-9420 or info@a1fsinc.com to begin moving your cargo anywhere domestically.