Uncertainty defined the conversation as FTR addressed the challenges facing the Class 8 market industry.
“This is not the cycle you were planning for,” FTR CEO Jonathan Starks told attendees Monday at the 2025 FTR Transportation Conference in Indianapolis.
Dan Moyer, commercial vehicles senior analyst at FTR, explained that market implications such as rising tariff costs, ongoing economic and freight uncertainty, and regulatory uncertainty are delaying recovery in the Class 8 market.
Fleet confidence is eroding as a result, Moyer said, and subsequently, a freight market recovery isn't expected until late 2026 and improving further into 2027.
Tariff pressures on Class 8 market
Moyer noted three main tariffs that are currently impacting or will impact the market in the near future:
- Ongoing investigation of Section 232 on medium and heavy-duty trucks and parts, which could be likely soon.
- Ongoing investigation of Section 232 on semiconductors, with exemptions granted for U.S. production.
- Steel, aluminum, copper, fabricated components tariffs that are now at 50%, extended on Aug. 18 to foreign steel/aluminum content in 407 derivative codes, including heavy-duty cargo trailers and parts (HTSUS 8716).
Reciprocal tariffs also cover imports from other countries:
- From Canada and Mexico: If the vehicles/parts meet USMCA rules, they can enter the U.S. tariff-free (0%). If they don’t meet the rules, Mexico could face 25% (possibly bumped to 30%) and 35% for Canada.
- From China: Vehicles/parts from China are subject to a cumulative tariff of 30%, and that stays in place while negotiations are ongoing.
- Other countries: Tariffs are set higher depending on where the imports come from (reciprocal tariffs announced Aug. 7), including India and Brazil at 50%, EU, Japan and South Korea at 15%, Taiwan at 20%, Vietnam at 20%, and most other countries at 10% to 20%.
FTR estimates that the biggest impact has come from the steel, aluminum, copper, fabricated components tariffs, with a 15% to 25% cost increase.
“Many OEM suppliers have probably eaten some of the tariff impacts so far, sacrificing our margin,” Moyer said. “But eventually, and probably in the next three to six months, a lot of those tariff impacts will have to be passed along to fleets that are looking to purchase new Class 8 units or other commercial vehicles.”
What does this mean for orders, backlogs and retail demand?
Demand is under pressure due to tariff uncertainty, Moyer said.
Orders are notably weak year over year, with August’s figures falling 14%. While the summer months followed typical seasonal decline, Moyer said it has been the lowest level of seasonal summer orders since 2009, excluding the sharp decline during COVID.
Since the announcement of reciprocal tariffs, orders have gone down 32% year over year, highlighting how demand has taken a hit from tariffs-associated uncertainty.
Consequently, backlogs (down 35% year over year in August) have been eroded by the weak orders but also continue to excess build.
FTR expects backlogs to decline further, presenting a challenging environment for OEMs and suppliers.
“With weak orders and excess build, it’s imperative that they align their production with demand levels to help stabilize backlogs and protect profitability,” Moyer said.
With order boards soon opening for 2026 production, Moyer noted “it’s possible that some OEMs might decide to delay opening of their order boards to get a better picture of how tariff impacts are happening throughout the country.”
Based on uncertainty and challenging market conditions, there’s a risk for the order season being below expectations.
“It’s important for OEMs to carefully manage production and scale it with demand to avoid overcapacity for the rest of the year and into 2026,” Moyer said.
As fleets defer purchases, FTR noted that Class 8 retail declined 15% year over year, while Class 8 inventories are up 1% year over year.
As for production, OEMs have leveled or lowered Class 8 output notably in July (down 34% year over year). Moyer said OEMs need to further reduce production levels to help manage inventories, expand aftermarket efforts, leverage incentives and financing options, and diversify revenue streams.
A key factor for OEMs and suppliers is maintaining production and cost discipline in an uncertain market, he added.
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Class 8 recovery
With tariffs, market uncertainty, weak freight demand and excess inventory, Moyer said FTR forecasts the market to decrease to around 247,000 units in 2025.
Necessary further build cuts are needed to stabilize backlogs or inventories, Moyer said, so FTR projects that the Class 8 market would remain soft through the first half of 2026.
Recovery is expected in the second half of 2026 with a slight rebound to around 252,000 units and a stronger momentum in 2027 of around 290,000 units.
