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The Real Impact of Increased Tariffs

by Charlotte Freed | May 10, 2019

Cargo ship importing goods during trade warsEconomic headlines regularly impact the trucking and freight industry. Recently, economic headlines involving tariffs have made the biggest impact. Often put in place to impact foreign economies, these “foreign national taxes” are placed in an attempt to encourage domestic manufacturers to increase production. However, these taxes often have a greater effect on the U.S. consumer and businesses who now pay a higher price for the goods they want or need. So how does this impact the trucking and freight industry?

Trade Volume

Trade volumes of certain goods typically drop due to high tariffs. As demand for goods are impeded, less trade flows through the country, impacting freight demand. However, when tariffs are first being placed, shippers can expect high demand as retailers look to front-load their inventory. As trade volumes settle after the initial rush to import goods, truckload rates will drop.

Driver Staffing

Tariffs will cause driver staffing to fluctuate much like demand and pricing. Companies need to be prepared for two scenarios: a tariff that drives domestic growth, and a tariff that decreases freight demand. In the first scenario, trucking companies can expect increased capacity, resulting in the need for more drivers. In the second scenario, companies should prepare for an initial increase in trade volume and an initial need for additional drivers. Then, companies will need to focus on optimizing routes with a core base of drivers as demand levels off.

Keeping an eye on on-going trade wars and economic trends can be difficult and time consuming, yet it is necessary to ensure fleets are staffed appropriately, allowing for efficient and effective operations. Consider partnering with a driver recruiting team, like Centerline, to help you keep your operations running without a hitch, even when the economy is under fire.

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