Too many trucks chasing too little freight.
That’s the condensed version of analytical firm FTR’s 2025 forecast for trucking in the wake of President Donald Trump’s foray into tariffs and their effects on the industrial and retail economy.
Those tariffs affected FTR’s economic forecast by raising the global tariff rate to around 21% from 2% in 2024. FTR’s estimate is significantly below maximum potential impact of around 28%.
“That is a very large increase,” explained Avery Vise, FTR’s vice president of trucking. “It seems to some degree we will have some inflation. There is no way around prices going up.”
The economy ended 2024 in good shape but FTR warned it was “overly dependent” on consumer spending. That carried over to Q1 hard data except for imports/inventories. Soft data this year have been “lousy,” FTR said, and uncertainty is “off the charts.”
“We’re kind of in this fog of war,” said Jonathan Starks, FTR president. “There’s a bit of panic out there. People are putting off long-term decisions until there is more clarity.”
The major uncertainties are “tariffs, tariffs, TARIFFS,” FTR said, as well as weakness in labor market and possible financial shocks in the system.
“We expect volatility in the rest of 2025 with continued uncertainty,” FTR’s forecast said.
It’s already hitting original equipment manufacturers. Truck manufacturer Paccar said it delivered 40,100 units in Q1. That’s a drop from 48,100 units in the same period a year ago, according to a company investor presentation. “The North American truck market is being affected by uncertain economic conditions and the overall impact of new tariffs,” Paccar CEO Preston Feight said on an analyst call.
FTR’s assumption allows for continued exceptions and potential deals between and among major trading partners. They will cause core inflation to rise to a peak “above 4%” on an annualized basis before easing gradually.
Diesel prices might restrain overall inflation but won’t fully offset it, FTR said. It will result in the Federal Reserve delaying further easing of interest rates. Unemployment is expected to rise from its current 4.2% rate this year and peak “above 5%” in 2026.
Sales of heavy industrial equipment, autos and light trucks and housing will be hurt by these tariffs, FTR officials said. Inflation, high mortgage rates and dull housing starts all are factors in limiting the housing market.
The Gross Domestic Product (GDP), which contracted 0.3% in the first quarter, will continue below historic rates. FTR’s forecast had GDP growth at 2.5% in the second quarter before scant gains are forecast at 1.6% and 0.6% in the third and fourth quarters this year.
Next year’s forecast for GDP growth is scant as well—1.2% in the 2026 first quarter, followed by 1.9%, 2.3% and 2.3% in the remaining three quarters next year.
Industrial production will fall off its 5.6% growth in this first quarter, spurred by “pre-buying” of heavy goods before the tariffs began. It is forecast to stay flat in this second quarter before falling by 1.5% and 3% the second half of this year, FTR’s forecast predicted.
“Industrial production is a big driver of freight,” Vise said on an FTR conference call on its forecast.
FTR’s goods transported index is even worse. After zooming 17.7% in the first quarter on “pre-buy” madness, FTR said it expects goods hauled to fall 8.4% in the second quarter, followed by drops of 4.9% and 2.7% the back half of this year. It doesn’t hit positive territory until next year, according to the FTR forecast.
That hurts long-term growth by limiting industrial equipment investment, the forecast added. Uncertainty over tariffs is driving nearly all of this. And its uncertainty is causing economic forecasters some worry.
“The situation regarding tariffs is nearly unprecedented,” said Bill Witte, chief forecaster for Witte Econometrics. “That makes forecasting rather difficult.”
One thing is certain—volatility—and it’s hardly a positive for the freight world, Witte concluded. “Tariffs are a negative supply shock to the economy. It will be negative for GDP, and a positive for prices.”
