Commercial Motor Vehicle Consulting (CMVC) reported Thursday in the aftermath of another weak new truck order report and President Donald Trump's 'Liberation Day' tariff announcement that Class 8 production could be in for a rough waters in the months ahead.
As FTR and ACT Research alluded in reporting their preliminary March Class 8 order totals Wednesday, CMVC President Chris Brady states tariffs on vehicles and vehicle parts produced in Canada and Mexico, repercussions from the White House's trade war on the freight environment and the possible alteration or elimination of EPA 2027 emission regulations weakening an expected pre-buy are all negative factors weighing on Class 8 production for the months ahead.
Brady says the impact of tariffs on vehicles and vehicle parts produced south of the border will be unavoidable for many manufacturers. Though the President's 25% tariff on imported vehicles only applies to light-duty trucks, it remains to be seen what parts will not be spared from the added tax. And Brady says a lot of new trucks (and the new components they require) spend time Mexico before finally reaching U.S. truck dealers.
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CMVC states Class 8 factory sales for trucks retail sold in the U.S. totaled 249,851 units in 2024, of which 42.1% were delivered from Mexican assembly plants. "There are opportunities to shift some Mexican production to U.S. assembly plants, but these opportunities differ by OEM and may be limited by U.S. plant capacity," he says.
Additionally, the global trade war created by President Trump's reciprocal tariffs will have large implications on the freight environment.
"In CMVC’s opinion, the trade war will do more harm than good to the U.S. economy resulting in a soft freight environment. Higher import prices will weigh on the growth rate of consumer spending, which has the largest pull upon the supply chain. Higher import prices will also increase businesses input prices and costs that cannot be passed along to customers will reduce operating margins, slowing business profits," Brady says.
Brady believes businesses will adjust investment spending to slowing profits, while retaliatory tariffs from other nations will reduce the competitiveness of U.S. exports and a trade war will slow global growth as well. He says America's most competitive industries are global, "so retaliatory tariffs combined with slower global growth will slow or dampen U.S. output related to exports, thereby weighing on the freight environment. A soft freight environment limits upward pressure on fleets to expand capacity to meet growing freight volumes."
And the soft freight environment was already beginning to make its presence felt in truck orders, CMVC reports, as the Class 8 retail sales rate for the first two months of the year was seasonally adjusted to 224,800 units, down from 258,886 units in 2024.
"The decline in U.S. Class 8 retail sales rate was a result of fleets in line haul applications rationalizing capacity in 2024 in response to the soft freight environment. Line haul fleets have brought capacity in equilibrium with the soft freight environment, but have spare capacity available in the near term to meet moderately higher freight volumes, so Class 8 truck sales will remain soft in the near term," Brady says. "The trade war is capable of keeping the freight environment soft for an extended period of time, limiting upward pressure on fleets to expand capacity, thereby keeping Class 8 truck sales soft for an extended period of time as well."
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He adds U.S. Class 8 inventories were excessive in February, as dealers’ stocks of 66,879 trucks represented 3.69 months of sales (stock/three month average of truck retail sales). Brady believes if OEMs and dealers are planning on a Class 8 truck pre-buy to help bring stocks in equilibrium with sales then this plan may not come to fruition if the Trump Administration chooses to reduce or eliminate EPA 2027 emission standards. Some type of pre-buy has been expected due to the regulations and if they ultimately are not enacted, Brady says the freight environment could remain soft, forcing Class 8 production to bring truck stocks in balance with the truck sales environment.
CMVC states in February Class 8 deliveries to the U.S. marketplace were 256,683 units SAAR, and U.S. Class 8 retail sales was 224,319 units SAAR, resulting in February inventories increasing by 3,203 units to 66,879 trucks.
"If there is no Class 8 pre-buy and Class 8 truck sales remain soft then truck deliveries must fall below truck retail sales in order to bring Class 8 stocks in equilibrium with the sales environment, resulting in large decreases in Class 8 production," Brady says.
