The US’s transportation sector – primarily its road and logistics industries – has long been at the forefront of America’s economic prosperity.
The nation has long been proud of its trucking industry that keeps Americans moving, connected, fed, clothed, healthy, entertained and employed. However, it is an industry that is facing an uncertain future due to a number of factors, as well as the spectre of tariffs being implemented by the current Federal Administration against Canada, China and Mexico.
America has long relied on its transport industry to connect people with goods and services across its vast land. In the early 1800s, the National Road was the first highway built entirely with federal funds, opening up the Midwest for settlement and commerce. This led to greater westward movement of people and goods, thus expanding the United States to what it is today.
The US road network and transportation services have long driven the growth and expansion of the country – connected by an interwoven network of roads, highways and railways. They facilitate the rapid movement of people and goods from coast to coast. This has resulted in increased urbanisation, economic growth, industrialisation, and connectivity between communities, towns and cities. The result is that today, the US road freight industry is responsible for moving over 70 per cent of all domestic freight.
A flourishing transportation sector is therefore vitally critical to the nation’s economy. Not only does it connect homes, workplaces and communities, it connects manufacturers with supplies and consumers with essential goods and products.
After taking a huge hit during the Covid-19 pandemic, the transportation and allied industries employed more than 16 million people across the US in 2023, which accounted for about 10 per cent of the US workforce. In addition, in 2023, transportation services contributed approximately $2.5 trillion to the US gross domestic product.
However, despite it being a powerhouse for America’s continued economic stability, the transport and logistic sectors are facing an uncertain future. According to a November 2024 article by the Manhattan Institute the US’s transportation system is at the ‘crossroads’ and facing a challenging and possibly precarious future, including “rapid changes in technology, values, culture, demographics, … transportation funding shortfalls and a backlog of needs for aging infrastructure.”
The latter of these has seen a plethora of accidents and delays caused by failing road and rail infrastructure, including the 2023 train derailment in East Palestine, Ohio, the Baltimore Bridge collapse and more. Such disasters have a deleterious impact on the nation’s ability to transport goods and services across America.
Added to these issues are the vexing topics of chronic shortages of qualified drivers in an industry where they are being driven away due to fluctuations in fuel prices, high operating costs, long hours and reduced returns. Coupled with this are cost of living issues and reduced consumer confidence, where the cost of eggs has been a topic of debate and anger domestically in what many see as a symptom of the global cost of living crisis confronting many governments.
These venerable industries are also facing challenges related to global supply chains, such as port congestions, as well as tougher safety and environmental regulations and the growing focus on reducing greenhouse gas emissions from vehicles, coupled with an increased push for the adoption of electric trucks and alternative fuels.
According to the US Environmental Protection Agency (EPA), “climate change can disrupt transportation networks, stress infrastructure, and pose safety risks to people.” It cites the rise in sea levels, changes in precipitation, extreme weather conditions, and heat fluctuations as major threats to the efficacy of transportation and logistics systems.
The Manhattan Institute added that, in addition to the concerns related to labour shortages, aging infrastructure, climate change, economic conditions, America’s transportation sector is also having to come to grips with issues of “electrification, automation, and application of artificial intelligence.”
The report also stated: “Technology has enabled significant changes in transportation, such as rapid increases in work-from-home participation, e-commerce utilisation, and technology-enabled services and business models (for example, everything from ride-hailing and e-bikes to computer-enabled logistics, payment, and scheduling capabilities for person and freight transport).”
The rapid rise of online shopping, increased demand for rapid deliveries, as well as the automation of freight handling in organisations, such as Amazon, have placed further strain on the trucking and transport industries.
But it hasn’t been all bad news for the transportation industry, with the National Retail Federation showing monthly inbound cargo for 2024 outperforming the 2023 volumes, with levels over two million Twenty-foot Equivalent Units (TEUs) anticipated for a sustained period. In addition, the US Bureau of Labor Statistics showed the inflation rate as of June 2024 was 2.97 per cent, similar to June 2023, but much lower than the June 2022 peak of 9.06 per cent.
Road transport industry stakeholders also have reason to feel buoyant, with the announcement on March 12, 2025, by the EPA that it is undertaking 31 historic actions, which includes reconsideration of electric vehicle mandates and truck emissions standards, in an effort to save the American economy trillions of dollars in regulatory and compliance expenses.
As part of its reviews of current practices, the EPA will review the ‘Clean Trucks Plan’, which includes the 2022 Heavy-Duty Nitrous Oxide (NOx) rule. That rule, created under the Biden Administration, will reportedly result in making goods delivered by trucks, such as food and household items, more expensive.
Lee Zeldin, EPA Administrator, said the raft of plans was part of the Trump Administration’s ‘Power the Great American Comeback’, to “to drive down cost of living for American families, unleash American energy, bring auto jobs back to the US and more.”
American Trucking Associations President, Chris Spear, has praised the Trump Administration for the plan to reopen the Phase 3 Greenhouse Gas emissions standards (GHG3), as well as the review of the federal NOx standard.
“GHG3 in its current form is unachievable given the state of battery-electric technology and the sheer lack of charging infrastructure,” said Spear.
“This rule has been an albatross for the trucking industry, threatening to reduce equipment availability, increase costs for businesses and consumers, and cause major supply chain disruptions.”
Spear said the trucking industry is keen to see a revival of a working partnership with the EPA that will improve emission standards and boost the transport sector.
“Crafting a new national rule will prevent states like California from attempting to make an end run around the administration, creating a patchwork of impossible mandates that would jeopardise our economy,” he said.
Spear said the proposed changes to the GHG3 by the EPA, would result in 60 trucks today emitting the same amount as one truck manufactured in 1988.
The Truckload Carriers Association (TCA) has also welcomed the EPA’s review of the GHG emissions standards for heavy-duty vehicles and a goal for “practical and achievable emissions standards”.
“As a founding member of the Clean Freight Coalition, TCA has worked diligently to ensure that federal emissions policies reflect real-world operational and economic considerations,” it said in a statement.
The current action by the EPA comes after the previous Agency announced, in March 2024, its “Greenhouse Gas Emissions Standards for Heavy-Duty Vehicles – Phase 3,” that set higher standards to reduce greenhouse gas emissions from heavy-duty (HD) vehicles beginning in model year (MY) 2027. Opponents to these stronger standards have argued that increased emissions reduction requirements for nitrogen oxide would result in substantial and exorbitant costs to a new Class 8 tractor.
The Trump-era EPA has won industry praise for the extensive reviews, which will also look at Greenhouse Gas Emissions Standards for Heavy-Duty Vehicles, as well as a reconsideration of light-duty, medium-duty and heavy-duty vehicle regulations that were the foundation for the Biden-Harris electric vehicle mandate. It is estimated that the EPA review could save $700 billion in regulatory and compliance costs that otherwise would have led to higher consumer prices on goods transported by trucks. As a result, the proposed changes are being billed by the current EPA as the “greatest and most consequential deregulation in the history of the United States.”
“ATA looks forward to working with the Trump Administration to develop realistic, technology-neutral federal emissions standards that will benefit our environment, preserve and create jobs and set our industry and supply chain up for success,” said Spear.
Despite the EPA’s welcomed action and reviews with respect to Greenhouse Gas Emissions Standards, there is a dark cloud looming over the future prosperity of the transportation and logistics industries in the form of the US Government announcing 25% tariffs on imports of many goods from Canada and Mexico, including cars, trucks, steel and timber, and which are to take effect from 2 April 2025.
Combined with the immediate retaliatory actions of Canada and Mexico, the tariffs’ impact on the trucking industry could be significant, with the potential to depress near-term truck volumes and, over time, reshape commercial vehicle manufacturing.
Despite Canada and Mexico retaliating with similar tariffs on US goods, industry experts view the American tariffs as highly impactful on the Medium Heavy Commercial Vehicle (MHCV) industry, particularly trucks and buses in the gross vehicle weight (GVW) Classes 4-8, or above 14,000 pounds. The tariffs could undo the work of USMCA trade agreement, which saw the share of commercial trucks imported from Canada and Mexico accounting for almost 33 per cent of new-vehicle demand in the US. Moreover, more than 40% of the heavier Class 8 trucks sold in the US are imported from Canada and Mexico.
In addition to those sanctions, in February 2025, the US Office of the United States Trade Representative (USTR) published its proposed actions under Section 301 of the Trade Act of 1974 (Section 301) to address the harm it saw being incurred by the US due to China’s seeking to dominate the maritime, logistics and shipbuilding sectors.
The USTR proposes to impose significant port fees on Chinese maritime transport operators and operators with current fleets of Chinese-built vessels and requirements for the increased use of US vessels to carry US goods in coastwise and international transport from US ports.
The USTR has proposed the following fees and restrictions on services:
Chinese transport operators will be charged: up to $1 million USD per vessel entrance to a US port; or up to $1,000 USD per net tonne of the vessel’s capacity per vessel, per vessel entry to a US port.
Transport operators with fleets comprised of Chinese-built vessels will be charged: up to $1.5 million USD per vessel entrance to a US port; or based on the percentage of Chinese-built vessels in an operator’s fleet; or an ‘additional fee’ of up to $1 million USD per vessel entrance to a US port if the number of Chinese-built vessels in the operator’s fleet is equal to or greater than 25 per cent.
The potential of high port fees on Chinese vessels entering US ports could lead to increased costs for importers and exporters, supply chain disruptions, together with possible retaliatory measures from China. If implemented this could affect global trade flows and impact businesses that rely on sea transportation.
The USTR is inviting comments from the public on the proposed Section 301 actions, intending to hold a public hearing on 24 March 2025 at the International Trade Commission. This comes after the US Chassis Manufacturers Coalition recently filed petitions alleging traded imports of chassis from Mexico, Thailand and Vietnam threaten the American chassis industry.
The petitions claim that producers in Mexico and Thailand receive an unfair benefit from numerous countervailable subsidies, which, depending on the country, may include tax exemptions and/or incentives, duty exemptions, preferential lending, grant programs, state-level investment programs and other support.
While the US transportation and logistics industries are certainly at the crossroads of their future growth and sustainability due to the array of factors, the industries are by no means being given the final rites. There will always be a need for transport services across America – the expansive nation that is devoted to mobility and all associated industries and services. As the Manhattan Institute study found: “Mobility has long motivated both public and private investments in transportation facilities and services.”
The future of transport in the US will require a unified, all-of-stakeholder, bipartisan plan of action to ensure that the industries weather the current storm and move forward, ensuring the future and viability of industries that have been the backbone of America’s growth and prosperity for the past 150 years.
