The United States-Canada trade war is threatening to create a new problem for the logistics industry: too little freight in one direction and too little equipment in the other.
The Airforwarders Association (AfA) is urging policymakers in the U.S. and Canada to resume trade talks before Canadian retaliatory tariffs covering $27.6 billion of U.S. exports take effect on Sept. 8, while a trucking lobbying group warns that weaker Canadian exports could leave trucks stranded on the wrong side of the border.
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Canada 's duties cover more than 700 products across apparel, electronics, appliances, steel, dairy, furniture and aluminum and range from 15 percent to 50 percent. The retaliatory measures are intended to match President Donald Trump's 50 percent tariffs on $20 billion worth of Canadian goods, which took effect on Aug. 22 after last-minute trade talks collapsed .
"Another round of tariffs will add costs for businesses moving goods across one of the world's most important trading borders, with consequences for supply chains, investment, and jobs," said Brandon Fried, executive director of the Airforwarders Association, in a statement. "Both governments need to get back around the negotiating table before this dispute escalates further."
In the days after the tariffs went into effect, the developments had little immediate impact on booking behavior and have not materially changed shipping activity, according to freight forwarder Freight Right Global Logistics.
"Importers appear to be continuing with existing shipping plans rather than significantly accelerating or delaying cargo," the company said on Aug. 26.
But concerns regarding shipping remain based on the previous iterations of duties imposed over the past year. An AfA member survey published in February found 83 percent of forwarders had seen reduced shipping volumes as a direct result of U.S.-levied tariffs, while more than half reported changes to customer supply chains and shipping routes.
"Forwarders are already seeing what prolonged trade uncertainty means on the ground, and further tariffs risk putting additional pressure on costs, prices and employment," said Fried.
The fallout could create an unusual equipment problem for cross-border trucking . After the negotiations breakdown, the Canadian Trucking Alliance warned that a decline in Canadian exports to the U.S. would not only reduce southbound freight volumes, but could leave Canadian trucks operating in the U.S. without enough loads to bring them back north.
"These risks creating a severe, structural equipment imbalance across the border, which will undoubtably increase logistical complexity and operational costs for businesses on both sides of the border, exposing the fact that commercial transportation cannot be treated as an isolated component of the trade ecosystem," the alliance said.
In a July survey of 348 U.S. and Canadian logistics decision makers, Canadian parcel delivery company Purolator found that found that 51 percent of North American businesses have already changed shipping routes because of tariff disruption, while 53 percent have changed suppliers and 52 percent have invested in strategic customs practices.
The response has been particularly pronounced among Canadian companies: 68 percent said they had adjusted shipping to and from the U.S., with 55 percent reducing their use of U.S.-based suppliers and 43 percent moving warehouse or processing operations to Canada.
Across both countries, 74 percent say they've experienced a moderate to significant impact on business planning due to the implementation of tariffs. On average, respondents said that tariffs have affected revenues by 23 percent.
Over half of all respondents (53 percent) have lost customers as a direct result of tariff impacts, but Canadian companies report higher customer loss rates than U.S. counterparts across all industries. This is most notable in retail, where 70 percent of Canadian companies have lost customers compared to 41 percent of U.S. retailers.
The trade war between the bordering North American countries is expected to hit consumers' wallets.
In the U.S., the latest Yale Budget Lab estimate puts the annual cost of the country's current tariff regime at roughly $1,100 per household, with the newly imposed tariffs on Canadian goods adding about $30 to that burden. In Canada, Oxford Economics estimates the latest round of tit-for-tat tariffs will push consumer prices 0.3 percentage points higher in 2027, adding to the cost pressures facing Canadian households.
The dispute comes amid continuing uncertainty over the United States-Mexico-Canada Agreement (USMCA), which underpins nearly $2 trillion in annual U.S. goods and services trade within North America.
Mexico's position within the USMCA remains unsettled , but the agreement itself is still in force as Washington and Mexico City negotiate changes to rules of origin and other provisions.
The country has emerged as a supply chain escape valve for both the U.S. and Canada amid the former's trade policy shifts. In the previous 18 months, 19 organizations moved distribution operations and 23 moved manufacturing to Mexico, according to the Purolator survey. Canadians accounted for 12 of the 19 DC moves and 12 of the 23 manufacturing moves. Looking ahead, 22 organizations plan to move distribution centers and 24 plan to move manufacturing there.
"The United States, Canada and Mexico have built highly integrated economies and supply chains and preserving that relationship matters for businesses and consumers across the continent," said Fried. "Disagreements will arise, but they should be resolved through negotiation rather than an escalating cycle of tariffs."
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