The tariff saga: How the North American bus market is navigating through the chaos 

News about tariffs have dominated the headlines for the past week. What started Jan. 20, as a memo from the White House that directed select cabinet secretaries to review and identify “unfair trade practices by other countries and recommend appropriate actions to remedy such practices under applicable authorities,” has blossomed into a rapid back and forth of which tariffs, if any, will go into effect, and when.  

What’s currently in place 

As of March 10, U.S. tariffs that are currently imposed include: 

• A 25 percent tariffs on goods that do not fall under the U.S.-Mexico-Canada Agreement (USMCA).  
• A lower 10 percent tariff on energy products imported from Canada that do not fall under the USMCA preference.  
• A lower 10 percent tariff on any potash imported from Canada and Mexico that does not fall under the USMCA preference.  
• No tariffs on goods imported from Canada and Mexico that fall under the USMCA preference.  

This update comes just days after President Donald Trump on March 4 imposed sweeping 25 percent tariffs on goods from Canada and Mexico and an additional 10 percent on goods from China. One day later, Trump announced relaxed tariffs on automotive parts, which impacts some heavy-duty vehicles. On March 4, the government of Canada announced its own countermeasures, imposing a 25 percent tariff on C$30 billion worth of goods imported from the U.S. The Canadian government has announced it is planning a second phase to implement retaliatory tariffs on U.S. goods. 

Transit industry’s reaction 

U.S. bus manufacturing and the larger North American transit bus supply chain has already been experiencing significant challenges, with several original equipment manufacturers planning or already closing operations. As Canadian Urban Transit Association (CUTA) President Marco D’Angelo noted in a letter to the Canadian government, “Bus manufacturing relies on a specialized, integrated supply chain.” Because of this, D’Angelo is encouraging the Canadian government to exempt buses and bus components in the planned phase two of retaliatory tariffs.  

In his letter, D’Angelo emphasized tariffs imposed on buses and bus components would result in the government effectively taxing itself given that these purchases are taxpayer funded. This will not only increase procurement costs for public transit agencies but also reduce the purchasing power of investments in transit infrastructure. D’Angelo anticipates in addition to increased costs, impacts from tariffs will disrupt manufacturing, lead to job loss and force agencies to increase fares in order to offset higher prices. When factoring in the U.S.’s tariffs on parts that may come from Mexico or China that then go to Canada, it has the potential to compound the issues further.  

Complicating the issue from the Canadian side is how different this round of tariffs seems compared to Trump’s tariffs in his first administration. During his first term, targeted tariffs were used as leverage to renegotiate the North American Free Trade Agreement. This time around, Trump’s end game isn’t as clear, given Mexico and Canada’s response to reducing fentanyl coming into the U.S. 

Patrick Scully, chief commercial officer for Complete Coach Works (CCW), agrees that while the bus market has dealt with constraints—most recently from the pandemic—the uncharted territory of these tariffs “really lies in the very dynamic nature of the application of the tariffs, which are one day left, one day right, next day up, next day down.” 

However, both Canada and the U.S. hope there is an end in sight for the tariffs. Scully says he “trusts and hopes” the tariffs are short term to stem potential fallout, such as increased costs for the end user, while Canada hopes they are abandoned altogether. Scully explains CCW is communicating with its customers, telling them if the tariffs apply, they will let the customers know about any cost increases. However, this is a delicate balancing act, as existing contracts outline constraints on how much added cost can be passed on to the customer. Any potential deficits could potentially be made up in new procurement contracts.  

“You can certainly try to include some language that allows the application of increases and so on,” Scully noted for new contracts, highlighting how during COVID-19, new contracts helped “right the ship.” 

This in turn could raise the prices for new procurements, which is in line with responses from a survey asking organizations about tariffs' impacts on the North American bus market. Several respondents said they anticipate “costs of buses, parts and other materials to increase,” along with “increased pricing to end users,” “raised prices to procure buses” and increased costs impacting “tight budgets” will “need to be revisited.” 

CUTA says its members have similar concerns, also noting increased costs of products, potentially reduced sales and disruptions to the supply chain. CUTA’s members are also concerned about jobs in vehicle and parts manufacturing that are potentially at risk.  

Looking ahead 

CUTA says it currently has open lines of communication with several ministers’ offices to discuss transit’s need for exemption from further imposed tariffs. CUTA is also engaging with the government during an outreach period, which serves as a consultation process to discuss potential impacts on specific industries should phase two be rolled out. CUTA plans to continue these efforts as long as the threat of tariffs persists.  

CUTA is also urging a coordinated response on both sides of the border to promote free trade and economic growth in both countries. With such an integrated industry, CUTA is leveraging its relationship with the American Public Transportation Association (APTA) to continue in cross-border dialogue to ensure international cooperation helps advance positive transit policy.  

Skully agrees that engaging with industry associations like APTA can be helpful to get the collective industry’s voice in front of elected officials.  

“I think we're a unified voice in Washington, [D.C.], certainly on a national basis, but also on an international basis,” Skully said.  

But Skully also emphasized the fluidity of this dynamic situation, adding that patience is needed as the industry waits and sees how this plays out.  

“I would say for my business member colleagues in the supply side, and I think also for the operator side, we're taking a measured approach and not trying to be knee jerk about it because if we did do something preemptively or in response to, let's say 48 hours ago, we then have to retract it again,” Skully said.