The U.S. trucking industry finds itself navigating uncharted waters as pending tariff policies create unprecedented uncertainty in vehicle procurement strategies. Covenant Logistics Group, a major player in the sector, has raised urgent concerns about the lack of pricing clarity from manufacturers, leaving fleet operators in limbo regarding their capital expenditure plans.
Pricing Uncertainty Disrupts Traditional Procurement Cycles
James "Tripp" Grant, CFO of Covenant Logistics Group, highlighted the unusual market conditions during the company's October 23 earnings call. "By this time of year, most large fleets would typically have received pricing information for trucks," Grant noted. "This year, that clarity simply isn't there."
The uncertainty has led to a significant slowdown in orders for Class 8 trucks and related equipment during the fourth quarter. Covenant CEO David Parker offered a stark assessment: "There's a possibility nobody will be buying Class 8 trucks." While perhaps hyperbolic, the statement reflects growing industry apprehension about procurement in the current climate.
Tariff Implementation Creates Complex Challenges
The core issue stems from a 25% tariff on heavy- and medium-duty trucks and their components, which took effect November 1 under an executive order signed by former President Donald Trump. However, critical implementation details remain unresolved, creating operational headaches for fleet operators.
"Is this tariff applied to complete vehicles or just certain components? If it's components, which suppliers are affected?" Grant questioned during the earnings call. These unanswered questions have effectively frozen procurement processes at many transportation companies.
Industry Response: Caution and Contingency Planning
Covenant has adopted a proactive approach, having secured financing for a batch of trucks while pausing further acquisitions. "We believe the prudent course is to maintain our current position and wait for market conditions to improve," Parker explained.
This cautious stance appears widespread across the industry. Drew Schoessel, trailer group president at Wells Fargo Equipment Finance, observed that many clients are extending equipment lifecycles rather than making new purchases. "We're seeing both trucks and trailers remaining in service longer than historical averages," Schoessel noted, adding that orders for 2026 delivery have also slowed noticeably.
Market Data Reflects Growing Hesitation
FTR's monthly Class 8 Truck Orders Report revealed a 41% year-over-year decline in September preliminary orders, totaling just 20,500 units. Analysts attribute this sharp contraction to mounting concerns about impending tariff changes and existing pressures on steel and other commodity prices.
Broader Implications for the Transportation Sector
The tariff policy, originally designed to protect domestic manufacturing and influence trade negotiations, has created complex ripple effects. While potentially benefiting some U.S. manufacturers, the measures risk increasing operational costs throughout the transportation sector—an industry that forms the backbone of American commerce.
Secondary markets may experience unexpected impacts as well. If new truck prices rise substantially, demand for used vehicles could surge, potentially driving up secondary market values. Similarly, maintenance costs may increase if tariffs affect imported replacement parts.
Strategic Considerations for Fleet Operators
Industry participants face several strategic imperatives in this environment:
• Closely monitor tariff policy developments and their specific applicability to vehicle classes and components
• Maintain open communication channels with OEMs regarding pricing and delivery timelines
• Evaluate extending current equipment service life where operationally feasible
• Explore efficiency improvements through route optimization and maintenance programs
• Assess potential secondary market opportunities if new vehicle pricing becomes prohibitive
The current situation underscores the transportation sector's vulnerability to trade policy shifts. As the industry awaits clarity on tariff implementation, fleet operators must balance caution with preparedness to navigate these uncertain conditions successfully.