President Donald Trump has directed his administration to explore reciprocal tariffs, aiming to impose the same trade taxes on imports as other countries impose on American goods. Under the new directive, his cabinet will assess trade relationships country by country and submit a report detailing the potential impact within six months. Meanwhile, the battle to bring down inflation remains complicated, especially as wholesale prices rose more than expected last month.
We have curated the latest news and trends shaping the freight world. Keep reading to find out more.
The Trump administration is looking at implementing reciprocal tariffs on all countries that impose taxes on imports of American products. President Trump vowed that if a foreign nation imposes a tax or tariff on U.S. exports, the U.S. will apply the same rate in return. He also warned against trade practices designed to bypass these tariffs.
The proposal targets nations using value-added taxes (VAT), which the administration views as a hidden trade barrier. While no specific countries were named, the European Union’s VAT system has been a point of contention. Some trade experts argue that tariffs could increase costs for American consumers. However, Trump sees them as a bargaining tool to bring jobs and manufacturing back to the U.S. So far, China is the only country facing new duties, with a 10% tariff placed on its exports earlier this month.
Wholesale prices rose more than expected last month, raising doubts about interest rate cuts later this year. The Producer Price Index, which measures costs before they reach consumers, increased 0.4% from December and 3.5% from a year earlier. Forecasts had predicted lower gains. This report followed news that consumer prices also climbed, marking four consecutive months of rising inflation.
Economists watch wholesale prices closely, as they can signal future consumer costs. Some of these figures feed into the Federal Reserve’s preferred inflation measure, the personal consumption expenditures (PCE) index.
Inflation surged in 2021 after the economy reopened, leading the Fed to raise interest rates aggressively. That effort helped decrease inflation, but recent data suggests those gains have stalled. Meanwhile, concerns are growing that Trump’s trade policies and immigration actions could increase prices.
Some trucking and intermodal carriers believe freight demand is turning a corner, but many shippers remain unconvinced. While truck capacity has tightened, recent contract negotiations suggest shippers still have the upper hand, securing rates close to last year’s levels.
Executives at Werner Enterprises and Knight-Swift Transportation see early signs of a shift, with rising tender rejections indicating that supply and demand are balancing out. However, some shippers report no noticeable changes in rejection rates and continue to secure flat pricing.
Forecasts have been unreliable, with repeated predictions of a rebound falling short. Breakthrough, a firm specializing in freight cost analysis, expects a shift by mid-2025, but C.H. Robinson’s leadership cautioned that previous projections have repeatedly been pushed back. If pricing power does return to carriers, it may look more like pre-pandemic trends, with gradual increases rather than sharp swings.
Half Price Books has been looking for a small warehouse in the Minneapolis-St. Paul area for more than a year without success. The used-book retailer needs about 6,000 square feet and has temporarily relied on storage units after its previous landlord leased its space to another tenant. However, this problem is not unique to the company. Businesses looking for small warehouses face similar difficulties.
Although warehouse vacancy rates have risen, space under 100,000 square feet remains scarce. In the fourth quarter of 2024, the vacancy rate for smaller buildings was 3.9%, compared to 6.7% for all warehouses and 10.1% for those more than 100,000 square feet. Developers have recently focused on large distribution centers, with smaller facilities making up just 8% of new construction in 2024.
Texas and California are set to take the hardest financial hit if Trump’s proposed tariffs are implemented. Businesses in the two states are projected to pay the most in new import duties, and the national tariff bill could jump from $78 billion to $433 billion. Texas, which spent $7.2 billion in tariffs in 2024, could see that number soar to $64 billion. And much of that will come from trade with Mexico. Steel and aluminum imports are also a major factor, with state businesses paying $411.7 million in 2024, now expected to rise to $2 billion. California’s tariff payments could triple from $17 billion to $46 billion.
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