ACT Research expects tariffs to extend the for-hire freight recession into 2026, following a temporary Q3 surge. Much depends on developments in the trade war in the coming months, as discussed in the latest release of the Freight Forecast: Rate and Volume OUTLOOK report.
“The ‘major questions doctrine’ is a legal argument the Supreme Court used to limit Biden’s authority on student loans and climate, ruling that federal agencies can’t make sweeping changes without clear congressional authorization. It was also cited by the US Court of International Trade when it ruled the IEEPA reciprocal and fentanyl tariffs unlawful in late May. These tariffs continue as the ruling is stayed.
“We think international trade is a major question, particularly for trucking, driving 16%-25% of US surface freight volume,” shared Tim Denoyer, ACT Research’s Vice President and Senior Analyst. “With a historic backlog on the Supreme Court’s emergency docket, but no appeal of the stay at this point, it’s not likely to be decided before the court takes a few months off soon. But if the eventual appeal is successful, it could reduce US import tariffs from around 20% currently to a high single digit percentage. At least significantly delaying these tariffs by sending the issue to Congress would improve the outlook for goods demand.
“By contrast, the Section 232 tariffs on steel & aluminum, currently 50%, are on firmer legal ground, which is affecting equipment supply. Both have significant implications for freight markets,” Denoyer concluded.
Freight Forecast Report Overview
The monthly 58-page ACT freight forecast provides analysis and forecasts for a broad range of U.S. freight measures, including the Cass Freight Index, Cass Truckload Linehaul Index, and DAT spot and contract rates by trailer type. The service provides monthly, quarterly, and annual predictions for the TL, LTL, and intermodal markets over a two- to three-year time horizon, including capacity, volumes, and rates. The Freight Forecast provides unmatched detail on the freight rate outlook, helping companies across the supply chain plan with greater visibility and less uncertainty.
ACT Research Overview
ACT Research is recognized as the leading publisher of commercial vehicle truck, trailer, and bus industry data, market analysis and forecasts for the North America and China markets. ACT’s analytical services are used by all major North American truck and trailer manufacturers and their suppliers, as well as banking and investment companies. ACT Research is a contributor to the Blue Chip Economic Indicators and a member of the Wall Street Journal Economic Forecast Panel. ACT Research executives have received peer recognition, including election to the Board of Directors of the National Association for Business Economics, appointment as Consulting Economist to the National Private Truck Council, and the Lawrence R. Klein Award for Blue Chip Economic Indicators’ Most Accurate Economic Forecast over a four-year period. ACT Research senior staff members have earned accolades including Chicago Federal Reserve Automotive Outlook Symposium Best Overall Forecast, Wall Street Journal Top Economic Outlook, and USA Today Top 10 Economic Forecasters. More information can be found at www.actresearch.net.
Additional Resources
With 20%-25% of US surface freight involved in international trade, tariffs are set to extend the for-hire freight recession. While recessionary effects of the trade war are still to come, we expect higher cost equipment as a result of tariffs to eventually tighten capacity and help end the long for-hire freight recession, according to the latest release of the Freight Forecast: Rate and Volume OUTLOOK report.
“As Q2 begins, retail sales are still brisk as consumers snap up pre-tariff prices, but freight demand fundamentals face major self-inflicted tariff headwinds. The pre-tariff inventory stocking period will soon reverse, and consumption will fall as prices rise,” shared Tim Denoyer, ACT Research’s Vice President and Senior Analyst. “We expect a few more months of brisk demand for pre-tariff goods, followed by a tariff adjustment period with lower goods demand. Freight is very much in the crosshairs of the trade war.”
“The trucking industry also faces considerable supply shocks related to new US government policy. Both equipment and labor supply are affected, and this is likely to press truckload rates up after tariffs take their toll,” Denoyer concluded.
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