Let’s be clear from the outset, we’re not trying to pose any kind of political agenda in this blog. We simply aim to inform you as a shipper, of the potential immediate impacts that we can expect to see from the recent tariff increases.

As of Tuesday, March 4th 2025 all imported products coming into the United States from Canada and Mexico are subjected to an increased 25% tariff. Further afield we’re also seeing Chinese import tariffs double from 10-20%. But, it’s not stopping there. Canada and China have immediately retaliated against the US and hiked up tariffs on all American goods. Mexico are still yet to announce how they might be retaliating, but these plans will also be revealed on Sunday. So, where does this leave our nations imports, exports and domestic freight shippers, let’s find out.

What has prompted the tariff increases? 🤔

The stated motivation for these tariff increases from Trump is that they’re in place for Canada to apply pressure to enforce stricter control on the flow of fentanyl into the US. This also goes for Mexico, except they’ve also raised tariffs on Mexico to tackle illegal immigration, according to multiple sources.

But, the truth is, nobody really knows exactly why Trump has started these tariff wars. Many people are assuming the main reason is to up production and manufacturing in the US. As they know most importers and exporters will not be willing to, nor will they be able to afford to pay these inflated tariffs. Leaving them to look for solutions at home.

But what do these tariff increases mean for shippers? 🚚✈️🚢🚝

The term “shipper” is fairly broad, so let’s break it down some more, into importers, exporters and domestic shippers. There will be different impacts across all forms of transportation from these tariff increases.

Importers

Trying to put this as lightly as possible, but in this scenario the shipper, the shipping company and the consumer will all hurt. There’s a reason people import goods to the US. It’s because quite honestly, they get them for a better price elsewhere in the world, where labor and materials are cheaper. Meaning that the shipper can (we know it’s icky to speak about) but protect their margins and also their price of product. These increased tariffs are forcing importers to make difficult choices:

1. Do you buy domestically and more expensively and absorb the cost yourself? (For a lot of businesses this is not feasible and they would go out of business fairly quickly)
2. Do you pass this extra cost onto the consumer, making your products more expensive?
3. Do you source products from other countries that do not have the excessively high tariffs? but perhaps compromise on quality, have an extremely long vetting process and have to learn new international laws

There is no right or wrong answer. Only you and your business can decide how you proceed in this unpredictable market. But, the phrase we keep hearing so often “buy American” is not as simple as it sounds. It’s important that people understand, it isn’t just finished goods coming into America that are being charged with these tariff increases. Components and materials that are required by “Made in America” businesses come from outside of the US too and these will also be affected by the new rates.

Advice #1 One piece of advice we think is super important is, if you’re importing goods from other countries, not including Canada, Mexico or China, be sure to have valid proof of origin of your products. If you cannot prove that you sourced your goods from a tariff-free area then authorities might impose tariffs that do not apply to your goods.

Advice #2: Look into options like bonded warehousing as a solution, where you only pay duties and tariffs once your goods are released to the market. This could combat up front tariffs and even allow you to re-export the goods if not sold without the burden of these new tariffs.

Exporters

Unfortunately, like importers, exporters have been caught in the cross fire too. Canada and China have quickly retaliated with some matching tariffs and some other increases to certain products. Making it incredibly difficult for exporters. Citizens of these other countries will like us, seek different sources for their products. This could leave American manufacturers that rely heavily on export work very low in demand.

Our advice: Honestly, until something gives and the tariffs reduce significantly, there isn’t much we can do to get around this. However, one piece of important advice would be to review incoterms. Make sure everyone around you is clear on which incoterms mean that the financial burden of tax and duties land with you the exporter, or your buyer. Using the wrong incoterms could leave you with an unexpected cost.

Domestic Shippers

Domestic shippers will also be directly impacted from these inflated tariffs. But, in a slightly different, but turbulent way. They might see…

Less demand in the short term

With tariffs as high as they are, we can definitely expect to see less demand for imported goods. This is because they will simply out price themselves. We’re already starting to see the evidence of this, with consumer spending falling in January and inflation growing at a high pace. This decrease will have a knock on effect to domestic transportation too, as there simply will not be as high a demand.

With that being said, if manufacturing and production in the US significantly increases, we will see the reverse of this to domestic freight. It will surge! It’s important to note that during the slow down, you might find that domestic transportation rates are cheaper than usual. Be weary as this could quickly change. So always factor in a buffer to your budgeting.

Supply chain disruptions when US production ramps up

These tariffs will more than likely cause a shift in where companies source their goods from to avoid paying the increased rates, like we’ve mentioned earlier, people will look closer to home. So, with a shift in production of most imported goods to the US. We might see certain transportation networks become overloaded in the long term, after the lull. Why do shippers care? this could bump up pricing and lead to more shipping delays.

Conclusion 💭

These tariffs almost certainly look like they will have a chaotic impact on global trade flows. We’re already seeing a substantial decline in market tracking indicies. No matter which industry you’re in or whether you’re simply a consumer, these tariff increases will have an impact across the nation, and our supply chains. Importers will face higher costs, forcing tough decisions on pricing, sourcing and market strategies. Exporters will struggle with the retaliation tariffs. Meanwhile, domestic shipping will see shifting patterns, which could look like: initially lower demand due to reduced imported goods. But then perhaps we might see long term growth if US manufacturing expands. It really is hard to call, and to judge how long these challenges will last. But one things for certain and that is, in this unpredictable market adaptability is key!

Keep ahead of trends, by keeping up to date with the latest news, and monitor closely what is going to happen next.

Need help with any of your specialized or expedited shipments in an unpredictable freight market?

At PEI, we’re experts in dealing with specialized freight and can handle yours with any custom requirements.