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Home»Automotive»Fleet Industry Braces for Impact as Tariff Battles Unfold [Updated] – Operations
Automotive

Fleet Industry Braces for Impact as Tariff Battles Unfold [Updated] – Operations

Elora HaynesBy Elora HaynesFebruary 26, 2025No Comments8 Mins Read
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Fleet Industry Braces For Impact As Tariff Battles Unfold [updated]
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Whether it’s challenges within the delivery sector or rising costs for vehicles and parts, the total impact of tariffs on the industrial fleet industry stays uncertain.

February 25 Update: Tariffs to Proceed as Scheduled Next Week

President Donald Trump said Monday, February 24, that sweeping U.S. tariffs on imports from Canada and Mexico “will go forward” when a 30-day delay on their implementation expires next week.

“The tariffs are going forward on time, on schedule,” Trump said when asked at a White House press conference if the postponed tariffs on the 2 U.S. trading partners will return into effect after the pause.

In line with S&P Global, the potential for a chronic 25% tariff on imports from Mexico and Canada, together with recently announced updates to tariffs on steel and aluminum, could have a multi-billion-dollar impact on Ford’s and GM’s profitability metrics.

“Such tariffs would slash billions from automakers’ profits, triggering ripple effects across the broader supply chain because of potential production disruption and driving up costs for the tip consumer,” said Nishit Madlani, autos managing director at S&P Global Rankings.

The corporate forecasts that the majority tier 1 suppliers will pass a considerable burden of upper costs on to automakers, who would eventually must pass it on to consumers through higher prices.

Aftermarket suppliers have greater pricing power and fewer production in Mexico, but tariffs on China could hurt some aftermarket suppliers. Nevertheless, dealers would experience fewer impacts overall and have a greater cushion on their credit metrics.

February 13: Steel and Aluminum Tariffs Add to Inflation Concerns

On Monday, February 10, President Donald Trump removed exceptions and exemptions from his 2018 tariffs on steel.

All steel imports will likely be taxed at a minimum of 25%, with other countries predicting they may lead to higher inflation. Trump also ordered 25% tariffs on aluminum imports, in comparison with 10% in 2018.

Canada, the biggest source of steel imports, was among the many first to criticize the brand new tariffs, while the European Union vowed harsh countermeasures. Trump maintains that tariffs will help level the playing field and make U.S. factories more competitive, but this comes at the chance of upper inflation.

Although U.S. corporations may profit from the tariffs and have the ability to extend prices, a results of that’s higher prices on anything made with steel and aluminum, like cars, parts, and components.

February 3: Where the Tariff Discussion Began

For the reason that 2020 United States-Mexico-Canada Agreement (USMCA) brought trade changes, some U.S. business leaders have raised concerns in regards to the potential effects of the newest proposed tariffs.

Tariffs imposed by President Donald Trump via executive order would add a 25% tax on imported goods from Mexico and 10% on imports from Canada and China. In line with the White House, the tariffs “are along with every other duties, fees, exactions, or charges applicable to such imported articles.”

Nevertheless, President Trump agreed to a 30-day pause on tariffs related to Mexico and Canada for border and crime enforcement concessions. The extra 10% tariff ordered on China still went into effect as scheduled on Tuesday, February 4.

Whether it’s challenges within the delivery sector or rising costs for vehicles and parts, the total impact on the industrial fleet industry stays uncertain.

Tariffs Could Threaten North American Auto Trade

In 2024, sales of latest light vehicles within the U.S. totaled 16.1m units, 61% of which were manufactured locally. In line with JATO Dynamics data, Mexico, Canada, and China accounted for 18% of total sales of latest vehicles within the U.S. in 2024.

“While the situation is continually evolving, the imposition of tariffs on the USA’ closest trade partners could have a significant impact on the automotive industry in North America, affecting the thousands and thousands of cars that enter the country from markets corresponding to Canada, China, and Mexico yearly,” Felipe Munoz, global analyst at JATO Dynamics, said.

Mexico is the second largest country of origin for brand new vehicles sold within the U.S. and a big production and export hub for a lot of carmakers. In 2024, Mexican-made light vehicle sales reached 2.19m units, accounting for 14% of the market and growing 13% yearly, outpacing U.S.-made vehicle growth of 1.7%.

Major automakers like Volkswagen, Stellantis, Nissan, Mazda, Honda, and Ford rely heavily on Mexican production and exports.

A bar graph depicting the % of 2024 U.S. volume sales coming from Mexico, Canada, and China per automaker brand.

Major automakers like Volkswagen, Stellantis, Nissan, Mazda, Honda, and Ford rely heavily on Mexican production and exports.

Meanwhile, Canada’s role in U.S. auto imports has declined, rating because the fifth-largest country of origin. In 2024, more vehicles sold within the U.S. got here from the European Union than from Canada.

Toyota and Stellantis depend on Canadian-made vehicles for 18% and 14% of their U.S. sales, respectively, while only 5% of Ford’s U.S. sales got here from Canadian plants.

Individually, 56,800 vehicles made in China were sold within the U.S. in 2024, giving the country a market share of 0.35%. “The US is imposing severe restrictions on Chinese-made vehicles despite the marginal role the country plays in America’s auto industry,” Munoz said.

Fleet Leaders Weigh In on Tariff Challenges

Fleets are essential to the U.S. economy, providing public services like emergency response and transit, delivering goods, and supporting businesses. In line with the NAFA Fleet Management Association, fleets represent 25% of vehicles on the road — 60 million cars, trucks, and equipment — and account for 20% of all vehicle purchases, move $10 trillion in goods annually, and contribute $800 billion to the economy.

“Widespread application of tariffs, particularly on our largest North American trading partners, has the potential to lift costs broadly for fleets in ways that may flow through to America’s consumers and taxpayers,” NAFA said in an announcement.

In an announcement from the Board of Directors, the Automotive Fleet & Leasing Association (AFLA) warns that impending tariffs on Canada, Mexico, and China could majorly impact the fleet industry.

Because the industry was recovering from pandemic-related challenges, latest uncertainties around supply chain disruptions emerged.

Key concerns include:

  • Delivery delays for vehicles and parts sourced internationally.
  • Rising vehicle and operational costs because of import tariffs and demand-driven pricing.
  • Budget constraints and prolonged vehicle lifespans (requiring fleet managers to regulate their strategies).

Given the interconnected nature of the U.S., Canadian, Mexican, and Chinese trade partnerships, AFLA is closely monitoring the situation and its potential effects on its members.

Nevertheless, MEMA, The Vehicle Suppliers Association, supports the U.S. agreements with Mexico and Canada to delay proposed tariffs and proceed trade discussions.

In line with the corporate, this negotiation period offers a probability to seek out solutions that maintain North American trade stability and protect the vehicle supplier industry, which is a big source of U.S. manufacturing jobs.

MEMA acknowledges President Trump’s priorities on border security and fentanyl trafficking but emphasizes the necessity for a collaborative approach that avoids disrupting the integrated North American supply chain.

“The unique partnership between the USA, Canada, and Mexico has enabled the creation, over many a long time, of a sturdy automotive and industrial vehicle industry and strengthened US manufacturing competitiveness globally,” MEMA said in an organization statement.

How Tariffs Are Impacting Small Fleet Operators and Costs

For smaller fleet operators that depend on global supply chains, the upcoming tariffs aren’t only a policy shift — they’re a direct threat to operational costs and pricing stability.

David Ziker, who just sold his stake in his 105-year-old family company, Indiana-based Ziker Cleaners, is following the updates.

“The plain query is (price spikes) fuel for the delivery fleet,” Ziker said. “Our principal suppliers, like poly and hangers, don’t come from Mexico, Canada, or China, but I even have to assume the whole lot will go up in price. The team back in South Bend is taking a look at this and gauging whether price increases for our customers will likely be the online result.”

“I’m about to order uniforms, and the costs in China have increased no less than 15%,” said Jeb Lopez, CEO and owner of Wheelz Up, a last-mile delivery contractor. 

From fuel for delivery fleets to the rising costs of essential supplies, business owners are bracing for higher expenses that would force difficult decisions on pricing and profitability.

Uncertainty Looms Amid Pause, Tariffs Could Increase

Although the 30-day pause offers temporary relief, fleet operators and suppliers remain on edge as unresolved trade negotiations or retaliations may lead to long-term disruptions.

The chief orders signed by Trump noted that if Mexico, Canada, or China retaliates against the U.S. concerning tariffs, the president may “increase or expand in scope the duties imposed under this order to make sure the efficacy of this motion.”

Editor’s Note: This text was originally published at 8:00 a.m. EST on February 5 and was updated at 1:00 p.m. EST Feb. 5 so as to add comments and data from JATO Dynamics.

Updated 9:30 a.m. EST Feb. 13 so as to add latest information on steel and aluminum tariffs, and comments from NAFA Fleet Management Association.

Updated 11:30 a.m. EST Feb 25. so as to add latest update on 30-day pause on tariffs for Canada and Mexico, plus a forecast from S&P Global.

This Article First Appeared At www.automotive-fleet.com

battles Braces Fleet Impact Industry Operations tariff Unfold Updated
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