Tariffs. That word is all over the news of late, and it’s something the nation’s top economist in the trucking sector called a “very fluid situation” Monday at the Truckload Carriers Association annual convention held in Phoenix.
Bob Costello, chief economist and senior vice president of international trade and security policy at American Trucking Associations, told the crowd during his 2025 Economic Industry Review that tariffs will have a number of impacts on carriers, including a steep increase in the cost of equipment, but one of the biggest impacts is one many in the trucking industry may not consider: the potential hike in ocean vessel port call fees.
“It absolutely could change freight patterns. I think it's a really big deal,” he said.
The Office of the United States Trade Representative recently proposed imposing service fees on Chinese vessel operators of up to $1 million per call at U.S. ports, as well as charging shipping companies using Chinese-built vessels up to $1.5 million per call.
Costello said while the aim is to use that money to help U.S. companies build ships, the problem is it would likely reduce the number of port calls, effectively changing freight patterns.
“What they're probably going to do is dump all of the cargo in one port and move on,” he said.
And it doesn’t solely impact imports.
“On the East Coast, you have small ports … that are really good for our exporters,” he added. “There are a lot of factories in Alabama, and those exporters are shipping this stuff through the Port of Mobile. There's a good chance a lot of these ocean carriers are not even going to make that call and not go to Mobile anymore.”
Consumers take the lead
Costello said he had expectations for the industry to slowly return to normal throughout 2025, following the consumer spending trends that fueled a drawn-out freight recession. But, he said, another recession could be on the horizon if those tariffs are implemented.
The Trump Administration has proposed an additional 10% on China, another 25% on steel and aluminum, and 25% on Canada and Mexico, the latter of which would have a significant impact on tractors and trailers.
“If it in fact goes through … for any substantial amount of time, I think that brings in a real risk of macro recession, no doubt about it,” Costello said. “It's going to be a drag on freight volumes because tariffs, after all, are taxes. As importers pay those, they have to raise prices. When you raise prices on goods, people are going to buy less of them.”
And that’s what caused the freight recession in the midst of a growing macroeconomy (GDP above 2% over the past two years) following the COVID-19 pandemic.
“We didn’t have as many outlets to spend that money (during the pandemic). We weren't traveling. We weren't going to sporting events. We weren't going to the movies. We all remember; it was not fun. So what did people start doing during that period? They just started buying stuff,” he said. “While you need truck movements for experiences on a dollar per dollar basis, it’s less than when we buy a good. Remember the term revenge travel? People were taking multiple vacations. They were going to Taylor Swift concerts and the like.”
Now, Costello said, it could cause the reverse effect on the trucking industry as the macroeconomy slows down. The labor market is good, the number of available jobs is normal, unemployment – though slightly up – is still low, and consumer spending is finally returning to normal.
Costello projects goods spending to be up 3.3% and experiences spending up 2.2% in 2025. And services inflation is running higher than goods inflation, meaning people will spend more on goods than services.
In addition, factory output, which fell 0.4% in 2023 and 2024, is expected to grow 1.3% in 2025 and 2.5% in 2026, with exceptions in certain sub-sectors, based on Costello’s predictions. He said he also expects existing home sales to grow, which means buyers will be spending money to fix up homes, and new housing starts – estimated at one million – will generate quite a bit of freight.
“It wasn't like the boom of the pandemic, but it's certainly much better, and I think that is absolutely going to help,” he said.
