Tariff Variables Muddy Sales Outlook for Truck Makers

Questions over the impact of potential tariffs on Mexican and Canadian goods plus raw materials muddied an already opaque outlook for U.S. Class 8 truck sales further over the past few weeks, according to senior executives at two of North America’s largest truck makers.

Should tariffs remain in place, however, truck prices are likely to rise as a consequence, warned executives from the parent companies of Freightliner, Western Star and International Motors, which accounted for 51.9% of Class 8 sales in 2024.

The Trump administration on Feb. 1 imposed a 25% tariff on U.S. imports from Mexico and Canada, but by March 6 that had changed to 25% tariffs on goods that do not satisfy U.S.-Mexico-Canada Agreement rules of origin and no tariffs on goods that claim and qualify for USMCA preference.

In a statement announcing the tweak, the White House acknowledged the structure of the automotive supply chain had played a major role in its decision. The exemptions only remain in place until April 2 though, as the administration continues to formulate its trade policy.

Still, Trump’s 25% tariffs on all U.S. steel and aluminum imports remain in place and duties on other products are likely to slow U.S. growth, U.S. Federal Reserve Chairman Jerome Powell said March 19.

Slower U.S. growth would see weaker demand for goods and likely hinder a recovery in the freight environment.

Image

Levin 

“I think it’s never been more difficult to make an outlook for the North American [heavy-duty truck] market than it is now,” Traton Group CEO Christian Levin said March 10 during the company’s fourth quarter of 2024 earnings conference call.

Part of that is due to tariff ambiguities.

“It’s still a little bit uncertain how the tariff system [for Mexico] would work,” said Daimler Truck CEO Karin Radstrom.

“For instance, as you know, we are building engines in Detroit that we are then sending across the border to Mexico, putting them into the truck and sending the truck back to the U.S.,” the top executive at the world’s largest truck maker said March 14 during the company’s Q4 earnings call.

And presently it is unclear if American parts in a Mexican assembled truck would impact the tariff status, Radstrom added.

Image

Radstrom 

Daimler Truck is prepared for many eventualities, said Radstrom.

“What’s good in the situation we face right now is that we can produce all models in the U.S. or in Mexico. So, for sure, we are preparing ourselves for different scenarios. And we can ramp up more in the U.S. if that would be required,” she said during the call.

Daimler Truck North America owns two Mexico plants: Saltillo and Santiago Tianguistenco. Saltillo, where Freightliner Cascadias are built, opened in 2009, and Santiago Tianguistenco was commissioned in 1991.

International’s Escobedo assembly plant opened in 1998. A full range of the company’s Class 8 lineup is produced at the plant, according to the Traton unit.

Traton Chief Financial Officer Michael Jackstein framed the conundrum in terms of numbers: “In 2024, we sold roughly 70,000 units in the U.S. Roughly 65% of this sales volume was coming from Mexico in Escobedo. In Escobedo, we source roughly 50% — 50% to 55% — from the United States.”

Paccar Inc.’s Peterbilt unit manufactures trucks in Mexicali. Sister company Kenworth opened its first Mexican truck production plant in 1959, according to a company history, partly to counteract trade measures.

Volvo Group in April 2024 announced plans to build a 1.7 million-square-foot heavy-duty truck manufacturing plant in Mexico that is scheduled to be producing Volvo Trucks North America and Mack Trucks in 2026.

In its Q4 earnings, Paccar estimated marketwide U.S. and Canada Class 8 retail sales would range between 250,000 and 280,000 trucks.

Daimler Truck anticipates Class 8 truck sales in 2025 across the U.S., Canada and Mexico to be in a range of 280,000 to 320,000 vehicles, compared with 308,000 trucks in 2024.

Levin said during the analyst call that heavy-duty truck sales in North America were expected to total 270,000 to 300,000 in 2025.

In a freight market only just hinting at a turnaround, and therefore an upturn in sales of on-highway Class 8 trucks, another layer of uncertainty is added through potential tariffs, particularly as the executives expect an increase in prices.

Daimler Truck Chief Financial Officer Eva Scherer said Freightliner and Western Star saw a strong start to the first quarter, but orders slowed over the past few weeks due to uncertainty related to tariffs.

“A recovery of the market in the second half of [2025] is dependent on the resolution of the current regulatory uncertainties, including potential tariffs,” Scherer said.

“There is a lot of different tariffs that we’re looking at,” Radstrom added. “The first one is steel, aluminum, and copper. This is one … everyone in the industry faces and is something we will eventually have in our pricing.”