Manufacturing every truck for the North American market would insulate a truck manufacturer from the impact of tariffs, right? Think again.
“We are feeling it now,” said Jonathan Randall, president of Mack Trucks North America, who gave a keynote at the FTR Transportation Conference, when asked about tariffs. “We build everything right now in the U.S. and what we find as a result is, we are actually disadvantaged today versus some [OEMs] that are producing in Mexico.”
This is because the truck maker pays tariffs on each individual component sourced outside the U.S., rather than the complete vehicle, which can amount to a larger total cost.
“Our entire organization is focused on working with our vendors and suppliers to do what we can to mitigate it,” Randall said of the tariffs. “Whether it’s onshoring or moving things to the States as it relates to supply and/or other creative ways to mitigate whatever that cost is.”
Randall anticipates tariffs will remain a factor next year, putting further upward pressure on costs. And as a result of all this pricing uncertainty, fleet buyers continue to sit on the sidelines rather than buy new trucks.
“There’s not this massive motivation right now for fleets to invest,” Randall said, noting an 18- to 24-month freight recession has curtailed ordering activity, and there’s plenty of inventory available for when fleets do need to replace vehicles.
Asked for his thoughts on the general economy, Randall said ‘uncertainty’ is the theme. While the vocational segment has held up better than on-highway, there is now an oversupply of straight trucks as other OEMs have pivoted into the segment, which has held up better than other segments.
The straight truck segment has grown from about 11-12% of registrations to 15-16%, Randall said.
“The one segment for us that has remained incredibly resilient and strong, is refuse,” he added.
The truck maker is also contending with uncertainties around the EPA27 emissions regulation, which the U.S. EPA has put under review. As a result, an anticipated pre-buy to get ahead of the higher purchase price of EPA27-compliant trucks didn’t materialize.
“This year was supposed to be an easy year,” Randall said. “We were supposed to have a pre-buy. That’s probably not going to happen.”
Randall said Mack sees three potential scenarios for how the EPA27 NOx rule review could play out: retaining the proposed 0.035 g/NOx limit initially targeted with extended warranty requirements on aftertreatment components; retaining the 0.035 g/NOx standard but easing requirements around extended warranties; or maintaining current NOx limits at 0.2 grams, where they stand today.
“They’re doing the best they can to try to read the tea leaves and we’re in the process of scenario-planning different ways of meeting whatever those standards might be when it comes to 2027,” Randall said of Mack leaders who are focused on regulations.
He added clarity is urgently needed, as manufacturers require time to test and certify their EPA27-compliant engines.
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