How the US-Canada Tariff War Is Reshaping North American Freight

The trade relationship between Canada and the United States has long been the backbone of North American commerce. For decades, the two countries operated under a framework of relative predictability — goods moved freely, carriers planned lanes with confidence, and shippers built supply chains that crossed the border without a second thought. That era of stability has been under significant pressure.

The escalating tariff dispute that began in earnest in early 2025 has introduced a level of uncertainty into cross-border freight that most logistics professionals have not seen in their careers. Tariffs on steel, aluminum, automotive components, agricultural goods, and a growing list of manufactured products have created a ripple effect that touches every corner of the transportation industry — from the rates shippers pay to the lanes carriers are willing to run.

Understanding what is happening, why it is happening, and what it means for your freight program is no longer optional. It is essential.

The current tariff environment did not emerge overnight. It is the product of a series of escalating measures and counter-measures that have been building since the renegotiation of NAFTA into the CUSMA/USMCA framework. While that agreement was intended to modernize and stabilize trade, it also introduced new rules of origin requirements and sector-specific provisions that have become flashpoints.

The United States has imposed tariffs on Canadian steel and aluminum, citing national security provisions under Section 232 of the Trade Expansion Act. Canada responded with retaliatory tariffs on a broad basket of American goods, including agricultural products, consumer goods, and industrial materials. The back-and-forth has continued through 2025, with both governments periodically announcing new measures, exemptions, and counter-exemptions that make compliance planning extraordinarily difficult.

For freight brokers and shippers, the challenge is not just the tariffs themselves — it is the pace of change. A shipment that was economically viable when it was booked may face a materially different cost structure by the time it crosses the border.

Cross-border freight volumes between Canada and the US declined measurably in the first half of 2025 compared to the same period in 2024. The decline is not uniform — it is concentrated in specific commodity categories and specific lanes.

Automotive-related freight, which has historically been one of the highest-volume cross-border categories due to the deeply integrated nature of North American vehicle manufacturing, has been particularly affected. Just-in-time manufacturing models that depend on parts crossing the border multiple times during the production process are especially vulnerable to tariff-driven cost increases and border delays.

Agricultural freight has also seen disruption. Canadian retaliatory tariffs on American agricultural products have shifted some purchasing patterns, with Canadian buyers exploring domestic or third-country alternatives for goods they previously sourced from the US. This has reduced southbound agricultural volumes on some lanes while creating new demand on others.

On the carrier side, the uncertainty has translated into tighter capacity on cross-border lanes. Carriers that operate primarily in the cross-border space have become more selective about the freight they accept, and some have shifted capacity toward domestic Canadian or domestic US operations where the regulatory environment is more predictable.

The most visible cost of the tariff dispute is the tariff itself — the additional duty paid on imported goods. But for freight professionals, the hidden costs are often more significant.

Border dwell time has increased substantially on many crossings. Customs authorities on both sides are processing more complex documentation, conducting more thorough inspections, and dealing with a higher volume of classification disputes. Shipments that previously cleared in two to four hours are now routinely taking six to twelve hours or longer. For time-sensitive freight, this is not just an inconvenience — it is a service failure.

Carrier surcharges have emerged as a direct response to the uncertainty. Some carriers are now applying cross-border surcharges that did not exist eighteen months ago, reflecting the additional administrative burden, the risk of delays, and the cost of maintaining compliance expertise. These surcharges are not always visible in the initial rate quote, which creates budget surprises for shippers.

Inventory carrying costs have increased as companies build larger safety stocks to buffer against border delays. A company that previously operated with two weeks of cross-border inventory on hand may now be carrying four to six weeks, tying up working capital and increasing warehousing costs.

Compliance costs have risen as companies invest in customs expertise, classification reviews, and documentation systems to reduce the risk of delays and penalties. For smaller shippers without dedicated trade compliance teams, this often means paying for third-party customs brokerage services that were not previously necessary.

The most sophisticated shippers are not waiting for the political situation to resolve. They are making structural changes to their supply chains that reduce exposure to tariff risk regardless of how the dispute ultimately plays out.

Nearshoring and domestic sourcing have accelerated. Companies that were previously comfortable sourcing from US suppliers are actively evaluating Canadian alternatives, even when the domestic option carries a higher unit cost. The total landed cost calculation — including tariffs, border delays, and carrying costs — often makes the domestic option more competitive than it appears at first glance.

Bonded warehouse strategies are gaining traction. By moving goods into bonded facilities before formal customs entry, shippers can defer duty payments and maintain flexibility to redirect goods based on market conditions. This approach requires more sophisticated logistics management but can provide meaningful financial benefits in a high-tariff environment.

Multi-modal diversification is another response. Some shippers are shifting freight from truck to rail for cross-border movements, taking advantage of rail's generally more predictable border processing and lower per-unit cost for bulk commodities. Others are exploring air freight for high-value, time-sensitive goods where the cost of delay exceeds the premium for air.

Carrier relationship investment has become a competitive advantage. Shippers who have invested in strong relationships with cross-border carriers — through consistent volume commitments, fair payment terms, and collaborative communication — are finding that those carriers prioritize their freight when capacity is tight. Spot market shippers are experiencing the worst of the capacity crunch.

In an environment this complex, the value of a knowledgeable freight broker has never been higher. A broker with deep cross-border expertise can help shippers navigate the tariff landscape in several concrete ways.

First, a good broker maintains relationships with multiple cross-border carriers and can provide access to capacity that is not available on the open market. When capacity is tight, those relationships matter.

Second, a broker with customs knowledge can help shippers identify documentation gaps before freight reaches the border, reducing the risk of delays and penalties. This is not a replacement for a licensed customs broker, but it is an important first line of defence.

Third, a broker can provide market intelligence that helps shippers make better decisions about timing, routing, and mode selection. Knowing which crossings are experiencing the longest dwell times, which carriers are adding surcharges, and which commodity categories are facing the most scrutiny is valuable information that most shippers do not have access to on their own.

The tariff dispute between Canada and the United States is unlikely to resolve quickly. Trade disputes of this nature tend to persist for years, and the political dynamics on both sides of the border make a rapid resolution difficult. Shippers who are waiting for the situation to normalize before making supply chain adjustments may be waiting for a long time.

The companies that will navigate this environment most successfully are those that treat the current situation not as a temporary disruption but as a new baseline. That means investing in compliance capabilities, building stronger carrier relationships, diversifying supply chains, and working with logistics partners who have the expertise to help them adapt.

At Oaken Logistics, we have been helping Canadian shippers navigate cross-border complexity for over two decades. The current environment is challenging, but it is navigable — with the right strategy and the right partner.

If you are concerned about how the tariff environment is affecting your freight program, we would welcome the conversation. Reach out to our team to discuss your specific situation and what options are available to you.