It's been a wild 36 hours for countries that do business with the United States and the motor carriers responsible for moving freight.
A panel of federal judges on Wednesday spiked President Donald Trump’s sweeping tariffs. The U.S. Court of International Trade said that the International Emergency Economic Powers Act (IEEPA), which Trump invoked to impose tariffs, does not grant a president “unbounded authority” to levy universal duties on imports.
However, the Court of Appeals for the Federal Circuit on Thursday granted the Trump administration’s request to temporarily pause the ruling that (briefly) blocked the 10% baseline tariff and reciprocal duties on various countries, as well as a set of specific tariffs imposed on Canada, Mexico and China.
What does it mean for the freight market?
Analysts noted that any freight benefit from a pause in tariffs will be short-lived, and any benefit from a pause that lasted less than 24 hours will be inconsequential.
Even if the court's ruling ultimately restricts President Trump’s use of the IEEPA as a legal foundation, it’s likely that the administration will continue to advocate for broad-based tariffs, said Avery Vise, vice president of trucking at FTR Transportation Intelligence.
“Disruptions and uncertainties remain and in some respects are even magnified," he said.
[RELATED: Tariffs trigger pre-buy behavior, analysts warn of steep freight decline]
Travis Kulpa, assistant professor of management (supply chain) at Grand Valley State University, said he doesn’t expect significant changes in nationwide freight market conditions, with firms likely to take a wait-and-see approach as tariffs are battled between the courts.
While some importers may try to rush shipments into the U.S. if a tariff suspension sticks, especially goods previously subject to 30% tariffs on China, the uncertainty around the appeal and its timeline makes the present situation very challenging for importers, said Jason Miller, associate professor of supply chain management at Michigan State University and interim chair of the Department of Supply Chain Management.
Paul Bingham, director of transportation consulting, Global Intelligence & Analytics at S&P Global Market Intelligence, agreed, adding: “With a lag of ordering and ocean shipping times, that would affect import freight tonnage and road freight used to transport imports from port terminals and on inland."
“There may be an additional short-term bump, but it won’t change the freight market’s current dynamics,” Miller said of a suspension of Trump's newest tariffs.
Potential for short-term disruption
Kulpa and Miller noted that the initial ruling is likely to result in importers removing goods that were previously subject to tariffs from bonded warehouses, possibly prompting local trucking activity. However, this would be likely temporary and highly contingent if the ruling is implemented without a delay.
There could also be a short uptick in cross-border freight movement as companies move quickly to secure tariff-free treatment, Vise said. However, FTR remains skeptical that will translate into a sustained increase in freight activity due to the uncertainty around the possible reinstatement of tariffs.
Vise pointed out that the short-term U.S.-China trade agreement was already expected to boost trade volume, so the impact of any development may be limited or difficult to isolate.
Even if the Trump administration's sweeping tariffs are paused long-term, Vise said his firm believes, at most, it would return freight activity to the levels that might have existed had the tariff never emerged.
“There’s no reason to expect any real boost in volumes,” Vise said, adding FTR doesn’t foresee a significant short-term boom or spike in market activity, as most of the previous tariff-related pull-forward behavior appears to have been a one-time adjustment.
“We do not believe businesses have the appetite to continue these sorts of boom-and-bust cycles with imports,” Vise said. “The uncertainty over whether current tariffs will be reinstated or whether President Trump will try to accomplish the same outcome through different means remains very high.”
Broader outlook
David Spencer, vice president of market intelligence at Arrive Logistics, pointed out that the closest comparable scenario is the early stages of COVID, when consumer demand surged and ocean shipping volumes spiked in response. The bottleneck was at the ports and congestion slowed down depending on how quickly freight could move inland.
From a carrier perspective, the pattern of where freight is entering the country and how it flows inland has already been shifting, Spencer said. With a potential recovery in China-related volume, Spencer said we could see freight flowing back through West Coast ports (which had seen its volume decline), creating a shift in lane preferences for carriers. This could lead to greater volatility across the broader market, he said.
DAT Freight & Analytics industry analyst Dean Croke said his outlook for the second half of the year remains unchanged.
“Rates and volumes will remain flat for the rest of the year or at least until manufacturers get some clearer visibility into future trade policy and start to ramp up manufacturing outputs,” he said.
Without a clear policy shift or external catalyst, Croke said they don’t see near-term factors that would alter supply and demand.
Given the likelihood that tariffs will remain a feature in trade policy, Vise said FTR doesn’t expect a material shift for the remainder of the year.
“Lack of clarity remains a problem for the coming months,” he said.
The Federal Reserve Bank of Atlanta recently published data that shows uncertainty is a factor holding back business investment and hiring.
“This uncertainty alone will cut into potential growth of freight volumes,” Miller said.
