The U.S. economy remained strong into the first quarter of 2025, but most economists are predicting growth to slow for the remainder of the year and through 2026.
However, opinions vary regarding the new administration in Washington: It may enact policies that could either dampen growth in the Real Gross Domestic Product (RGDP) or spur further growth, depending on the information source.
Even U.S. government agencies disagree on predictions, with the Congressional Budget Office forecasting RGDP growth of 1.9% by the end of 2025 and the Federal Reserve Board predicting 2.1%. In contrast, Deloitte calls for 2.4%, Goldman Sachs forecasts 2.5% and the International Monetary Fund anticipates 2.7%.
All of these sources predict further slowing in 2026.
Inflation is still a key concern for the Federal Reserve, which made its third cut of 2024 to the federal funds rate in December. The interest rate range is now 4.25% to 4.5%. The Federal Open Market Committee (FOMC), which sets the rates, is expected to consider another adjustment in March.
What about trucking?
Whether anticipated economic growth will translate to more freight — or higher rates — for the trucking industry is even harder to predict.
Analysts at ACT Research predict modest growth in freight demand for 2025, at a pace of 1.8% over 2024 levels.
In a January 9 webinar, analysts at FTR Transportation Intelligence forecast similar growth.
Jason Miller, professor of Supply Chain Management at Michigan State University’s Eli Broad College of Business, is concerned about manufacturing startups.
In a recent LinkedIn posting, Miller noted that the number of new manufacturing plants opening in the U.S. has declined; in 1988 there were more than 30,000, and in 2022 that number dropped to about 15,000.
“There is little reason to think we will see a huge increase in manufacturing plants over the next few years,” Miller wrote. “Despite all the talk of reshoring over the last decade, we haven’t seen new plant openings get back to pre-GFC (Global Financial Crisis of 2007-2008) levels, let alone 1990s levels.”
An increased demand for shipping would serve to push freight rates higher, but it doesn’t appear that demand will come from increased manufacturing.
The other side of the supply-demand equation is capacity — and that side is problematic too.
U.S. sales of new Class 8 trucks remained strong in December 2024, despite declining from the previous December. Throughout North America, more than 22,000 trucks were bought, and another 36,800 were ordered, according to ACT Research.
The number of carriers has been shrinking. The Federal Motor Carrier Safety Administration has reported more authority revocations than new carrier registrations for most of the past two years. That number is nearing equilibrium.
Both contract and spot rates are beginning to see upward movement, but weak manufacturing numbers combined with strong truck sales create a considerable headwind. Carriers should see some rate relief this year, but it will be a slow
process.
Impact of a new administration
If there’s good news for the coming year, it’s in the Energy Information Administration’s (EIA’s) Short-Term Energy Outlook. The agency expects global oil production to grow faster than demand, increasing stocks. The agency forecasts U.S. crude oil production to grow to a new record of 13.5 million barrels per day, with prices for both diesel fuel and gasoline dropping.
These EIA predictions were compiled prior to President Donald Trump’s inauguration on January 20.
Part of Trump’s campaign platform was to increase production and achieve energy independence, and he signed executive orders that open up drilling and fracking within hours of his inauguration.
Those actions won’t increase production immediately, but the news can impact market prices.
Another Trump promise, to impose tariffs on U.S. trading partners, has the potential to severely disrupt the trucking industry if enacted. Threatened tariffs increases on Canada and Mexico could curtail trade, especially if those countries enact retaliatory measures.
The supply of trucks, as well as their pricing, could also be impacted. All of the major Class 8 manufacturers have manufacturing facilities in Mexico, with the Volvo plant in Monterrey not yet completed.
Since the OEMs sell in Canada, Mexico and South America, production for most might be shifted to ensure that trucks sold in the U.S. are manufactured here — but changes to production could add cost and delay delivery, even if tariffs are avoided.
The tariffs could also impact products hauled by trucking.
According to a Brookings article by Douglas A. Rediker published in December, “The consequences of Trump’s tariff threats,” the auto industry would be severely impacted. Tariffs would violate the United States-Mexico-Canada Agreement (USMCA), Rediker wrote, and greatly increase vehicle prices.
“Each vehicle produced under the USMCA framework crosses the border an average of eight times during production, meaning the tariffs would be compounded at each stage,” Rediker wrote.
Truck parts manufactured in China would also become more expensive, pushing up the price of new trucks and aftermarket parts for repairs.
Another possible consequence of tariffs is a trade war, which would deny products to American consumers as well as decrease import freight volumes.
“If we have tit-for-tat retaliation, whether it’s 25% tariff (or) 60% and we go to where we were in the 1930s, we’re going to see double-digit global GDP losses. That’s catastrophic. Everyone will pay,” Ngozi Okonjo-Iweala, director general of the World Trade Organization, said during the World Economic Forum annual meeting in Davos, Switzerland.
Some of Trump’s threatened tariffs that were to have gone into effect in February were temporarily placed on hold, with both Mexico and Canada taking steps to improve border security and reviewing trade agreements. However, on February 24, Trump announced plans to forge ahead with enacting tariffs against these nations in March.
Other Trump actions, such as deporting illegal immigrants, halting incentives for electric vehicles and prohibiting leases for windmill farms are among those that could impact freight markets.
Most of the trucking industry was looking forward to an improving freight market in 2025. Unfortunately, with all of the factors in play, the road to recovery could well be bumpy.
Cliff Abbott is an experienced commercial vehicle driver and owner-operator who still holds a CDL in his home state of Alabama. In nearly 40 years in trucking, he’s been an instructor and trainer and has managed safety and recruiting operations for several carriers. Having never lost his love of the road, Cliff has written a book and hundreds of songs and has been writing for The Trucker for more than a decade.
