Trucks and trailers carrying a tariff surcharge are being treated like hot potatoes – no one wants to buy them or own them for fear the tariffs will be suddenly removed or changed.

Fleets are hesitant to buy for fear of overpaying and dealers don’t want to carry tariffed inventories in case the tariffs are removed and they have to sell that equipment at a loss. Even equipment finance companies are refusing to finance the tariff portion of the equipment.

“Tariff surcharges are being imposed and we’re being pushed to stock some of these trucks that have these surcharges,” Kyle Treadway, dealer principal with Kenworth Sales, said during a dealer panel at FTR’s 2025 Transportation Conference. “We have already paid for it and when the tariff goes away, we immediately have a problem.”

Mark Hall, general manager – trailers, with Stoops Freightliner and Quality Trailer, agreed. “If we order that inventory, we have to figure out how to move it.”

Just how much are tariffs expected to add to the cost of a new piece of equipment? Dan Moyer, FTR’s equipment analyst, predicts the total impact will be 15-24% on Class 8 trucks, 15-23% on Classes 4-7 trucks, 16-28% on dry van and reefer trailers, and 17-30% on other heavy-duty trailers including flatbeds.

While those kinds of price increases will be difficult for buyers to stomach, FTR chairman Eric Starks said the unpredictability is equally unwelcomed.

“If you don’t know what the operating environment is going to be tomorrow, or in three weeks or a year, how do you make investment decisions?” he asked.

Overall tariff rates in the U.S. were at 2.5% at the beginning of 2025 and they surged to more than 30% before courts stepped in and some were challenged. They’ve leveled off in the mid-teens.

“How many of you feel confident you understand what tariffs are going to look like within the next 30 days?” Starks asked a packed house. Not a single hand was raised in response.

OEMs react

Mack Trucks builds all its trucks in the U.S. You’d think it would be insulated from the impact of tariffs. Not so, said Jonathan Randall, Mack Trucks president, North America.

“It’s impacting us,” he said, noting Mack is attaching a tariff surcharge to new trucks – the most common reaction by OEMs looking to recover costs. “We build everything right now in the U.S.,” he added during a keynote at the FTR conference. And what we find is, as a result, we’re actually disadvantaged today versus some who are producing in Mexico.”

That’s because of instead of paying tariffs on a vehicle imported from Mexico, the company is paying them on each component imported for installation on a Mack truck.

All manufacturers are struggling with the impact of tariffs. Krista Toenjes, general manager – North America on-highway business with Cummins, said the moving targets have been difficult to manage. At Cummins, for example, every little widget on a turbo has to be assessed to determine its source and the appropriate tariff.

The company considered moving some U.S. production from China to India in response to tariffs on China. “Now, we have 50% tariffs on India. It was a great strategy at the beginning, now it’s a challenge,” she said. “We are looking at ways we can dual-source or near-source, to bring the supply closer to home, but that has its challenges.”

Bringing production to the U.S. or sourcing from domestic suppliers may address the tariffs, but now you’re faced higher labor costs. If you can even find the labor. Alan Briley, president of Fontaine Trailer Company, said he worries U.S. suppliers may not be able to find the workforce to ramp up production when industry demand recovers.

Taranjit (Singh) Johar, executive director, procurement and supply chain risk with Allison Transmission, also worries about what will happen when the U.S.-Mexico-Canada (USMCA) trade pact expires next year.

“If USMCA goes away, then everything is on the table,” he said. “We are working with our suppliers to find out where they are buying these parts. We cannot expect our suppliers to absorb all that. Nobody in the manufacturing industry can absorb a 25-30% hit to their margins.”

And then there are practical concerns to consider. Allison Transmission does its high-tonnage casting in China. The required casting machines are built in Europe or China – not the U.S. — and Johar said it would take two years just to get one such machine up and running in the U.S.

“We’d have to transfer that technology from China and that comes at a cost,” he said.

Each of the manufacturers speaking at the FTR conference said they are communicating more frequently than ever with their suppliers and being transparent with them on future demand requirements. They’re also right-sizing inventories so they aren’t stocking more tariff-affected parts than needed.

“We have a dedicated team working on tariffs and mitigation strategies,” said Cummins’ Toenjes.

“We’ve started scheduling regular reviews with our vendors proactively,” added Briley.

While nearshoring is an option, Allison’s Johar noted shifting production is extremely costly and money is no longer cheap. “The cost of money is high,” he said. “These are very capital-intensive investments. How can you make investments today? First, we need policy clarity. That’ll give us demand clarity. And hopefully lower interest rates [follow].”

And policy clarity isn’t just needed on tariffs, he added. Immigration issues which affect labor availability, interest rates and monetary policy, even EPA regulations are all in the air.

While manufacturers and suppliers have tried thus far to avoid passing on the costs of tariffs to the end user, eventually some or all of the cost will have to be passed along. Tariff-free inventory was flush but those vehicles are vanishing from dealer lots. Moyer said, “probably in the next three to six months, the tariff impacts will have to be passed on to fleets who are looking to purchase Class 8 units or other commercial vehicles.”

“We are running out of an environment where any of it is being absorbed,” said Fontaine Trailer’s Briley. “At some point all of this gets passed on.”

Allison’s Johal agreed customers are most likely going to have to absorb the costs of tariffs.

“We don’t have 40-50% gross margins, it’s inevitable that will be passed on to the end consumer, unfortunately,” he said. “And demand is not even growing, it’s declining.”

“We’re looking at all options,” added Toenjes. “How do we adjust? And we’re looking at pass-through, too.”