Trump Announces 25% Tariff on Imported Heavy Trucks

Trump Announces 25% Tariff on Imported Heavy Trucks
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President Donald Trump revealed plans on Monday to implement a 25% tariff on all medium- and heavy-duty trucks imported into the United States, effective November 1. This marks a major expansion of the administration’s protectionist trade policies aimed at shielding domestic manufacturers from international rivals.

The announcement raises significant legal questions about the president’s authority to impose tariffs that may conflict with existing trade agreements, such as the United States-Mexico-Canada Agreement (USMCA), which Congress approved and guarantees tariff-free trade for qualifying vehicles.

Background on the New Tariffs

The President had previously announced in the prior month that heavy truck imports would face additional duties beginning October 1, citing national security concerns. The administration framed these tariffs as necessary protection against what it described as unfair foreign competition, positioning the policy as beneficial for American truck manufacturers, including Peterbilt and Kenworth (both owned by Paccar), as well as Freightliner (owned by Daimler Truck).

Scope and Impact

The new tariff policy applies to a broad range of commercial vehicles, encompassing delivery trucks, garbage collection vehicles, public utility trucks, various types of buses (including transit, shuttle, and school buses), tractor-trailers, semi-trucks, and heavy-duty vocational vehicles.

While the United States has negotiated 15% tariff rates for light-duty vehicles under trade agreements with Japan and the European Union, the applicable rates for larger vehicles from these nations remain unclear. Additionally, the Trump administration has permitted manufacturers to subtract the value of U.S.-sourced components when calculating tariffs on light-duty vehicles assembled in Canada and Mexico.

Industry and International Response

The U.S. Chamber of Commerce has voiced opposition to the proposed truck tariffs. In its communication to the Commerce Department, the organization highlighted that the five largest sources of truck imports are Mexico, Canada, Japan, Germany, and Finland—all American allies or close partners that pose no national security threat.

Mexico stands as the primary exporter of medium- and heavy-duty trucks to the U.S. market. Government data indicates that imports of these vehicles from Mexico have surged threefold since 2019, reaching approximately 340,000 units according to research published in January.

Trade Agreement Implications

Under the USMCA (United States-Mexico-Canada Agreement), medium- and heavy-duty trucks can cross borders tariff-free, provided that at least 62.5% of a heavy truck’s value derives from North American sources, including components such as engines and axles, raw materials like steel, or assembly labor.

The tariffs may significantly affect Stellantis, the parent company of Chrysler, which manufactures heavy-duty Ram trucks and commercial vans in Mexico. The company has been actively lobbying the White House to avoid steep tariffs on its Mexican-produced vehicles.

Mexico’s Manufacturing Presence

Mexico hosts 14 manufacturers and assemblers of buses, trucks, and tractor trucks, along with two engine manufacturers, according to the U.S. International Trade Administration. Sweden’s Volvo Group is currently constructing a $700 million heavy-truck manufacturing facility in Monterrey, Mexico, with operations scheduled to begin in 2026.

Mexican officials have contested the new tariffs, informing the Commerce Department in May that Mexican trucks exported to the United States contain an average of 50% U.S. content, particularly diesel engines. Last year alone, the United States imported nearly $128 billion in heavy vehicle parts from Mexico, accounting for roughly 28% of the total U.S. imports in this category.

Legal and Constitutional Questions

The proposed tariffs raise complex questions about the balance of presidential authority and congressional power over trade policy, as well as whether such actions can legally override trade agreements that Congress has approved.

Constitutional Framework

The U.S. Constitution grants Congress the power to regulate foreign commerce and impose tariffs. However, Congress has enacted various laws delegating certain tariff authority to the President under specific circumstances, including national security concerns and international emergencies. Courts have generally upheld these delegations as constitutional, finding they don’t impermissibly transfer Congress’s legislative power to the executive branch.

Presidents typically invoke several statutes when imposing tariffs, including Section 232 of the Trade Expansion Act (on national security grounds) and the International Emergency Economic Powers Act (IEEPA), which allows the president to declare national emergencies.

The USMCA Exception

USMCA, which replaced NAFTA and was approved by Congress in 2020, contains a vital modification regarding national security. Unlike NAFTA, which narrowly defined “essential security interests” in specific categories, such as arms trafficking and wartime actions, the USMCA allows a party to take measures it considers necessary for protecting its own essential security interests under Article 32.2. This broader language potentially provides more legal cover for the President to invoke national security as grounds for tariffs.

The Trump administration has argued that such tariffs are permitted under the USMCA’s national security exception. However, this interpretation is contested. Earlier in 2025, President Trump imposed 25% tariffs on imports from Canada and Mexico, citing an “extraordinary threat posed by illegal aliens and drugs.” Canada and Mexico formally accused the United States of violating USMCA when those tariffs took effect in March.

Congressional Response

Some members of Congress have introduced legislation to require congressional approval before a president could impose tariffs on U.S. allies and free trade agreement partners. The proposed STABLE Trade Policy Act would reclaim congressional authority over trade policy and limit the president’s ability to use national security statutes against allies. However, this legislation has been blocked and has not advanced.

The debate centers on whether Congress should take back its constitutional authority over tariffs or whether the President needs flexibility to respond quickly to perceived threats. Historically, courts have been reluctant to second-guess presidential determinations about national security, making judicial challenges to such tariffs difficult.

Unresolved Legal Status

Whether the truck tariffs legally conflict with USMCA remains an open question that depends on several factors: whether the President can successfully invoke the national security exception in Article 32.2, whether courts would be willing to intervene in what might be considered a “political question,” and whether trading partners will successfully challenge the tariffs through USMCA’s dispute resolution mechanisms.

As of now, the legality of imposing tariffs that appear to conflict with Congressional-approved trade agreements remains contested, with the matter likely to be resolved through a combination of diplomatic negotiations, potential litigation, and possible Congressional action to reassert its authority over trade policy.

Publicly Traded Companies Affected

The tariff announcement has significant implications for several major publicly traded companies in the heavy-duty truck manufacturing and automotive sectors:

Heavy-Duty Truck Manufacturers

PACCAR Inc. (NASDAQ: PCAR) – The American Fortune 500 company manufactures Peterbilt and Kenworth trucks, two brands mentioned explicitly by President Trump as beneficiaries of the tariffs. PACCAR holds approximately 30% combined market share in Class 8 trucks in the U.S. market.

Daimler Truck Holding AG (XETRA: DTG) – The German-based company owns Freightliner and Western Star. Freightliner is currently the largest heavy-duty truck manufacturer in the U.S. with approximately 37% market share of Class 8 trucks and manufactures vehicles in both the U.S. and internationally.

AB Volvo (Stockholm: VOLV-B, OTC: VLVLY) – The Swedish manufacturer holds about 10% of the U.S. Class 8 truck market and is currently constructing a $700 million heavy-truck factory in Monterrey, Mexico, scheduled to begin operations in 2026.

Navistar International (formerly NYSE: NAV) – Now owned by TRATON Group (a subsidiary of Volkswagen), Navistar produces International brand trucks with approximately 14% U.S. market share. The company was taken private in 2021 when TRATON acquired all remaining shares.

TRATON SE (XETRA: 8TRA, OTC: TRATY) – Volkswagen’s truck subsidiary owns Navistar and also produces MAN and Scania brand trucks globally.

Automotive Manufacturers with Heavy-Duty Operations

Stellantis N.V. (NYSE: STLA, Milan: STLAM) – The parent company of Chrysler produces heavy-duty Ram trucks and commercial vans in Mexico. The company has been actively lobbying against steep tariffs and recently announced plans to invest approximately $10 billion in U.S. operations.

Ford Motor Company (NYSE: F) – While Ford exited the Class 8 heavy-duty market in the late 1990s, the company maintains the largest market share in medium-duty trucks (Class 4 to 7) in the U.S.

Component and Engine Manufacturers

Cummins Inc. (NYSE: CMI) – A prominent diesel engine manufacturer that supplies engines to various truck makers. The company has significant exposure to the heavy-duty truck market and projects that North American demand for heavy and medium-duty trucks could decline by as much as 30% due to tariff-related economic uncertainty.

Market Impact

Stock prices for these companies have shown volatility in response to tariff announcements. Shares of German truck makers like Daimler Truck and TRATON declined following the announcement, while PACCAR stock rose approximately 6% as investors viewed the company as a potential beneficiary of tariffs protecting U.S. manufacturers. The overall heavy-duty truck market has experienced declining sales, with a 13.9% year-over-year drop in February 2025 due to economic anxiety and tariff concerns affecting capital spending decisions.


Sources

  1. Shepardson, D., Martinez, C., & Heavey, S. “Trump imposing new 25% large truck tariff starting Nov. 1.” Reuters via Yahoo Finance, October 2025.
  2. Congressional Research Service. “Congressional and Executive Authority Over Foreign Trade Agreements.” Congress.gov.
  3. Congressional Research Service. “Congressional and Presidential Authority to Impose Import Tariffs.” Congress.gov.
  4. Miller Canfield. “Can the President Impose Tariffs without Congressional Approval.” National Law Review, 2024.
  5. Chatzky, A. & McBride, J. “Back to the brink: North American trade in the 2nd Trump administration.” Brookings Institution, March 2025.
  6. “United States–Mexico–Canada Agreement.” Wikipedia, updated October 2025.
  7. Senator Coons, C. “As tariffs loom, Republicans block Senator Coons’ bill on Senate floor that would prevent President Trump from unilaterally imposing tariffs on allies.” U.S. Senate Press Release, 2025.
  8. “Fleets Explained: History of the 7 major heavy-duty truck manufacturers in the U.S.” Fleet Owner, October 2024.
  9. “The 7 Largest Semi-Truck Manufacturers in the US.” Charter Trucks, October 2024.
  10. “Heavy Duty Truck Manufacturers.” Vertical IQ, October 2024.
  11. “Navistar International Stock Overview: Commercial Vehicle Manufacturer Performance and NAV Share Price Analysis.” Cleverence, April 2025.
  12. “Daimler Truck Holding AG Stock Information.” Yahoo Finance, Multiple Sources, 2025.
  13. “PACCAR Inc – Investor Relations.” PACCAR Corporate Website.
  14. “AB Volvo Stock Information.” Yahoo Finance and Nasdaq Stockholm, 2025.
  15. “Stellantis Plans $10 Billion U.S. Investment to Refocus on Core Market.” Bloomberg via Yahoo Finance, October 2025.
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