Short-term cross-border freight demand has spiked as shippers rush to move goods to "beat the tariff" before the potential new trade barriers take effect next month, analysts said.
The 25% tariffs on Mexico and Canada are currently on hold for another week, giving importers a brief window to build inventories ahead of upcoming tariffs on steel and aluminum. The real impact is expected to hit in Q2 as businesses begin adjusting to the new cost realities, said Hamish Woodrow, head of strategic analytics at Motive.
Tariffs could lead to a potential inflation increase of $1,000 to $1,200 per individual, said Mazen Danaf, Uber Freight senior economist and applied scientist, during the company's Q1 market update.
“We could see significant impact on cross-border volumes, resulting in abundant capacity,” Danaf said. “Intra-Canada and Mexico volumes are particularly vulnerable as the two countries have approximately 75% to 80% of their exports going to the U.S., and exports make nearly one-third of their GDPs, so their effects will be severe on these two countries.”
There would be continual cross-border stockpiling, Danaf and Woodrow pointed out.
If tariffs do come into effect, Woodrow expects it would disrupt normal seasonal patterns as companies deploy short-term mitigation measures. Some will delay inventory shipments until later in the year, hoping for policy changes or exemptions, while those that stocked up in advance may adopt a wait-and-see approach before making further moves.
Amit Prasad, Intelligent Supply Chain & AI Practice Leader at Capgemini, added that tariffs could also create surplus capacity in an already over-capacitated freight market.
Approximately 83% of Mexico’s exports and 78% of Canada’s exports go to the U.S., while about one-third of U.S. exports are sent to Canada and Mexico. Higher tariffs could disrupt trade routes, Prasad said, prompting businesses to shift shipments toward lower-tariff alternatives and potentially disrupting pricing on key shipping lanes.
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Scott Shannon, vice president of North American Surface Transportation at C.H. Robinson Worldwide, said while they haven’t seen a major shift in shipping volumes yet, more customers are reaching out for help with planning ahead of the potential tariff changes in March.
Customers have been eager to take control of their supply chains and not be as susceptible to disruption, Shannon said. In the company’s recent global customer survey, tariff concerns are listed among the top risks, even above inflation and forecasting challenges, with 50% of companies exploring new sourcing options to cut costs, while nearly a quarter are seeking tariff exemptions or refunds.
However, Woodrow noted the supply chain industry is now more diversified and more prepared compared to Trump’s first tariffs implementation in 2018 after years of economic disruptions, including labor strikes and shipping bottlenecks.
“Long-term impacts on cross-border freight would also depend on what tariffs are imposed on which countries and what retaliatory tariffs those countries impose on which U.S. exports,” said Paul Bingham, director of transportation consulting, Global Intelligence & Analytics at S&P Global Market Intelligence.
As an example, Bingham said auto and auto parts shipments would drop if tariffs on Mexico and Canada are imposed, as higher costs reduce sales and production. Similarly, volumes of Mexican produce are less affected as food demand is stable, and costs can be passed to consumers.
If tariffs on overseas trade partners are higher than those on Mexico and Canada, manufacturing in the U.S. could increase, boosting cross-border freight, Bingham said.
However, Bingham cautioned that higher tariffs could weaken the economy, reducing overall demand and cross-border volumes.
Shifting trade routes
Woodrow said trade with Mexico is expected to grow as companies seek cost-effective land-based entry points, while U.S. manufacturing investments will likely increase driven by rising import costs and the need for increased supply chain resilience. Many of these patterns are already underway.
“Trucking corridor volumes can and do change with changes in economic geography that reflect where commodities are produced competitively and where the consumption markets are located,” Bingham said. “Trade routes serving export markets can also be affected by tariffs if an exporter’s price competitiveness selling into a country decline, resulting in lower export freight volumes on that route.”
Competitive advantage
“Certain regions tied to goods production and shipping that are newly protected by differential tariff impacts could gain a competitive advantage,” Bingham said.
As an example, Bingham pointed out that if the U.S. imposes the threatened 25% tariffs on Mexico and Canada, and tariffs on China remains or are increased, the exporters in other countries such as in Europe or Japan could gain a competitive advantage in exporting to the U.S. at the expense of the tariffed countries.
In the near term, Woodrow said that West Coast ports are likely to feel the greatest impact as companies front-load shipments from Asia to get ahead of potential tariff increases.
“We already saw this with an unseasonal lift in Port of LA container arrivals that were up 24% year over year in December and 45% in January,” Woodrow said.
As uncertainty and volatility persists, Woodrow said it would lead to unseasonal shipping patterns and short-term advantages for certain ports and carriers.
