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Trucks and truck makers are taking a double whammy from tariffs; the cost of raw materials to build the trucks has shot up, and the tariffs are having a stifling effect on shopping and shipping. For Volvo, building in the U.S. has actually been a hindering factor in terms of cost. It is paying tariffs on raw materials and components that would not hit the company if they were assembling the trucks in Mexico. "All trucks built in the U.S. in Dublin. The engine production in Hagerstown. components are built in Canada and Mexico. You buy and build them all. They pay the tariff on every component eligible for a tariff, we pay the tariff," President of Volvo Trucks Peter Voorhoeve told us. "If you had a factory in Mexico, the steel and engine components- you don't pay tariffs. You can build that whole truck in Mexico and roll it across the border as a USMCA compliant product – you don't pay tariffs on that truck. They have a competitive disadvantage." Still, the company is devoting to building trucks for America in America. Volvo invested $400 million to retool its plant in Dublin, Virginia. But the tariffs have a second effect: a shaky economy leading to less freight, and less need for long-haul sleeper trucks like the VNL. Koeck told us that the company closely monitors freight coming into port, and the rates are just not good. "Freight costs are going up because there isn't enough freight. Smaller owner/operators have gone out of business. Lots got into the business after COVID and now we are in a low position. Companies are not hiring. Consumers are not spending enough because we are uncertain," Koeck said.
