US plans for new truck tariffs on commercial vehicles

Highlights

• US president announced 25% truck tariffs, applicable to medium and heavy commercial vehicles but not yet implemented.

• Potential for US interim agreements with Canada, Mexico to be integrated into USMCA talks.

• Mexico considering increasing tariffs on countries without an existing free-trade agreement.

MHCV tariff statement raises more questions

On Sept. 24, US President Donald Trump posted to his social media platform, Truth Social, that the US would impose 25% truck tariffs, applying to medium and heavy-duty commercial vehicles, starting Oct. 1, along with other tariffs on certain pharmaceuticals and furniture. 

For these truck tariffs to be in effect, the president needs to issue an executive order—published in the Federal Register—with the tariff details. As of Oct. 7, that has not happened, and the tariffs are not in effect. On Oct. 6, the president posted to his social media platform that the tariffs will go into effect on Nov. 1, still without details and without an executive order posted.

The S&P Global Mobility medium and heavy-duty vehicle (MHCV) forecast teams see the truck industry as sensitive to regional tariffs, as the manufacturing supply chain is deeply integrated across North America. However, determining the extent of potential disruption requires several open questions to be answered.

Among these open questions, one of the most important is whether USMCA-compliant trucks and parts will see a tariff on non-US value, as is the case with light-duty vehicles, or if the new levy will impact the full value of new MHCVs coming across the border, including US value add.  

While the US issued an order that prevents the other Section 232 tariffs from “stacking” on each other, it is not clear whether this new tariff will have the same exemption. For the MHCV sector, the open question raises doubts for importers of parts and vehicles from mainland China and Japan, in particular. 

Finally, it has not been confirmed if all MHCV vehicle types greater than 5 tons gross vehicle weight rating (GVWR) will be impacted by the truck tariffs. A key distinction in internationally shared customs codes allows separate treatment of truck tractors, straight trucks and chassis, for example.

So far, the impact of other tariffs to the US MHCV sector has been less visible on prices, though we are seeing some changes in production sourcing and footprint. These changes have not included new investments in manufacturing, however.

From January through June 2025, year-over-year price increases on new MHCV trucks remained below 2.0%, per US Bureau of Labor Statistics figures. This is well shy of the more-than 10% increase that had previously been seen as a worst-case scenario. Amid weak demand and countermeasures by suppliers and OEMs, we expect larger pricing increases to be delayed until 2026. 

North American MHCV production sees lowered outlook for 2025 and 2026

Relative to production, however, we see automakers hitting the brakes harder. Along with truck tariffs concerns, there are weak conditions across many MHCV vocational markets. With some reporting still incomplete, we estimate that North American MHCV output fell about 30% year-over-year in the summer months, after falling 22% year-over-year in the first quarter.  

Our commercial vehicle forecast outlook for the second half of 2025 has shifted down. Prospects for output in 2026 are lower too, as doubts grow about the expected “prebuy” ahead of the EPA27 emissions regulation reductions. 

In recent months, there has been increasing evidence of changes in the production footprint and re-allocation of jobs and volumes among plants. Within North America, OEMs are reducing production disproportionately at plants in Mexico. In June and July 2025 combined, MHCV output was down 20% year-over-year in the US but down more than 40% year-over-year in Mexico. The difference is telling.

At the plant and model level, adjustments in response to truck tariffs are varied. Some models made in multiple countries for US customers appear to be fulfilled increasingly out of US plants, compared to 2024 sourcing. In many cases, the relative share coming from US plants has shifted further toward the US by 5 percentage points or more, even where the US was the leading source to begin with.

A significant element of the commercial vehicle market is truck fleets. In 2025, business conditions for truck fleets remains mixed, and supply-demand balance is not yet recovered to where fleets are again placing truck orders in large numbers. In this environment, fleets’ ability to accept higher truck prices is poor.  

There has been little progress reported on talks between the US and Canada or Mexico, and Canada’s prime minister has raised the possibility that there will be no interim agreement related to tariffs before the official USMCA review set for July 2026. 

Mexico also considering tariff increases

Mexico has proposed new legislation called Ley de los Impuestos Generales de Importación y de Exportación (LIGIE). The law targets imports to Mexico from countries lacking an existing free-trade agreement (FTA) with Mexico. As we understand, if it is passed, duties are expected to be implemented on or around January 1 and to sunset by December 2026, unless extended. 

Though this law is not final, the LIGIE could affect more than 1,000 products and US$52 billion in imports to Mexico, according to reports. Generally, these products already have a tariff, but LIGIE increases it to the maximum allowed by the World Trade Organization, according to Mexico’s Economic Minister. 

The primary countries impacted by this measure are expected to be mainland China, India, Russia and South Korea. It is largely expected that imports from Canada and the United States would be exempt, as the plan targets countries Mexico does not have agreements with.

In 2024, 22.8% of light-vehicle Mexico sales were imported from Mainland China; 1.0% from South Korea and 6.6% from India. The largest light-duty vehicle importers from mainland China are GM, SAIC and BYD. Light-duty vehicle importers from India include Volkswagen, Hyundai/Kia and Suzuki, with Nissan importing from India starting in 2025 as well. Light-duty vehicle importers from South Korea include GM, Hyundai/Kia and Renault.  

About 20% of Mexico’s new MHCV registrations are imported from outside of USMCA, and about half of those come from countries lacking an FTA with Mexico, including mainland China and India.

If enacted, raising costs for price-sensitive MHCV customers would add further headwind to the recovery of Mexican market momentum, following the recent MHCV sales plunge coinciding with new 2025 emissions standards. Some Chinese OEMs with local plants may adjust supply in response.

North American MHCV brands may be impacted due to sourcing in mainland China and India of parts and/or complete vehicles sold in Mexico, including versions of the Freightliner FL360 family and the International CT series, for example. Potential MHCV levy increases for non-FTA countries could rise from 20%-25% to 35%-50%.

Between now and Nov. 1, we expect the administration will follow through with providing clarity on the new tariffs. Regardless of the details, a conclusion to the Section 232 investigation into tariffs for the trucking industry will be welcome. Whether or not Mexico’s proposal to increase tariffs on goods imported from countries it does not have free-trade agreements with could be resolved by the end of 2025.