08/27/2026
Why the Canada–U.S. Trade Dispute Could Drive Freight Rates Significantly Higher
Lower Freight Volumes Do Not Necessarily Mean Lower Freight Rates
The escalating trade dispute between Canada and the United States is creating significant uncertainty for businesses on both sides of the border. While much of the immediate attention has understandably focused on tariffs and the increased cost of imported goods, there is another consequence that Canadian and American businesses need to prepare for:
The cost of moving freight between Canada and the United States could increase significantly.
At first glance, this may seem counterintuitive.
If tariffs result in fewer goods being traded between Canada and the United States, there will be fewer shipments. Normally, lower demand would be expected to create lower transportation rates.
The trucking industry, however, does not operate quite that simply.
Reduced Trade Means Reduced Freight Volumes
Canada and the United States have one of the largest and most integrated trading relationships in the world. Trucking is particularly important to that relationship, accounting for more than half of Canada–U.S. trade by value.
When tariffs increase the cost of Canadian products entering the United States — and Canadian counter-tariffs increase the cost of American products entering Canada — businesses may reduce orders, change suppliers, postpone purchases or source products domestically.
The result is potentially fewer truckloads moving across the border.
That reduction in freight volume creates a chain reaction throughout the transportation industry.
Carriers Will Adjust Their Capacity
Trucking companies cannot economically operate equipment indefinitely when there is insufficient freight to support it.
If Canada–U.S. freight volumes decline for an extended period, carriers will inevitably begin adjusting their networks. Trucks and trailers may be reassigned to stronger domestic or regional markets. Older equipment may be removed from service. Independent operators may leave certain cross-border lanes altogether, while larger carriers may reduce the number of trucks committed to Canada–U.S. transportation.
This creates an important distinction:
There may be less freight — but there may eventually be even less available equipment to move it.
Once that happens, the economics change dramatically.
The Backhaul Problem
One of the most important factors in cross-border trucking is something many businesses never see: the return load.
A truck travelling from Toronto to Chicago, for example, does not simply need a profitable southbound shipment. The carrier also needs to consider what that truck will carry back into Canada.
The economics of both directions are interconnected.
If tariffs substantially reduce Canadian exports into the United States, fewer Canadian trucks will have an economic reason to travel south. That can ultimately mean fewer Canadian trucks sitting in U.S. markets available to bring American freight north.
Likewise, reductions in northbound freight can affect the economics of southbound transportation.
This imbalance can quickly create equipment shortages in specific markets even while overall trade volumes are declining.
Fewer Trucks + Fewer Runs = Higher Rates
Transportation pricing ultimately depends heavily on available capacity.
As carriers reduce equipment or frequency on affected lanes, shippers may find themselves competing for a smaller pool of qualified cross-border carriers.
The equation becomes fairly straightforward:
Reduced Trade → Lower Freight Volumes → Carrier Capacity Reductions → Fewer Cross-Border Runs → Tighter Equipment Availability → Higher Freight Rates
This will not necessarily happen evenly across every market.
Some lanes may remain competitive, while others could experience significant increases depending on the balance of northbound and southbound freight.
Specialized equipment, expedited transportation, temperature-controlled freight and locations already experiencing limited carrier availability could see even greater pressure.
The Market Is Already Showing Signs of Tightening Capacity
Even before the latest escalation in the trade dispute, Canadian freight markets were showing signs of tightening equipment capacity.
Canada's Class 8 tractor fleet was approximately 3.2% smaller year-over-year in July 2026, and industry forecasts have indicated that further contraction could support higher Canadian truckload rates into 2027.
The Canadian Trucking Alliance has also warned that reductions in Canadian exports do not affect only southbound transportation. When fewer Canadian trucks enter the United States, there are consequently fewer Canadian trucks positioned there to transport American goods back into Canada.
That is an extremely important consideration for anyone responsible for transportation procurement.
Rates Cannot Be Viewed Independently From Carrier Economics
Carriers continue to face substantial operating expenses regardless of freight volumes.
Equipment financing, insurance, maintenance, labour, regulatory compliance and other fixed operating costs do not disappear simply because there is less freight available.
If a carrier previously operated five trucks per day on a particular cross-border lane but can economically justify operating only three because of reduced volumes, the cost of maintaining service must ultimately be recovered across fewer revenue-producing shipments.
Empty miles also become increasingly important.
A carrier that cannot secure a viable return load must either reposition the equipment empty or increase the rate on the available load sufficiently to compensate for that risk.
Either scenario puts upward pressure on freight pricing.
Businesses Should Prepare Now
Companies that regularly transport goods between Canada and the United States should not assume that declining trade volumes will automatically produce cheaper freight rates.
The opposite could occur.
If the current trade dispute continues and cross-border volumes decline substantially, the trucking industry will adjust. Once equipment has been reassigned, parked or removed from a market, capacity cannot always be restored immediately when demand returns.
Businesses should therefore begin reviewing their transportation strategies now.
Developing stronger relationships with dependable carriers, forecasting transportation requirements earlier, allowing greater flexibility with pickup and delivery schedules and avoiding dependence on last-minute spot-market capacity could become increasingly important.
The Bigger Picture
Canada and the United States have spent decades developing one of the world's most integrated supply chains. Trucks, trailers, drivers and freight routinely move back and forth across the border as part of a transportation ecosystem dependent on volume moving in both directions.
Trade disputes disrupt that balance.
The biggest misconception may be that fewer shipments automatically mean cheaper transportation.
In trucking, volume supports capacity.
When enough volume disappears, capacity eventually disappears with it.
And when businesses once again need those trucks, they may discover that significantly fewer are available.
That is when freight rates can rise — quickly and substantially.
For Canadian and U.S. businesses dependent on cross-border transportation, the message is simple:
Do not wait for a capacity shortage to begin planning for one.
