A Comprehensive Guide to Federal Policy Updates and Their Impacts on the Transportation Industry

The regulatory landscape for the transportation industry is shifting as new federal policy updates come into play. From tariffs to environmental regulation rollbacks, these transportation policies have far-reaching implications for shippers, carriers, 3PLs, energy producers, and supply chain stakeholders. Understanding how these updates impact operations is imperative to maintain efficiency and competitiveness in a rapidly changing policy environment. Below, we outline the major policy updates and the ripple effects across the transportation sector.

Key Federal Transportation Policy Updates in Focus

1. Tariffs

The reintroduction of tariffs under the current administration is one of the most consequential changes impacting transportation policies. Key highlights include:

• China Tariffs: Blanket tariffs of 10% on all Chinese goods were implemented in February with an additional 10% levied on March 4. In response, China enacted retaliatory countermeasures, targeting approximately $13.9 billion worth of U.S. goods. These included tariffs on critical sectors like oil and gas, farm equipment, and mineral export controls. Following the March 4 tariff rate increase, China announced further retaliatory actions, focusing on agricultural products.
• Canada Tariffs: Blanket tariffs of 25% on Canadian imports were implemented on March 4. This is apart from the 10% tariffs on Canadian oil and gas. Shortly after, on March 6, President Trump implemented a short-term reprieve on Canadian goods covered under the USMCA. Additionally, starting on April 2, the U.S. will implement reciprocal tariffs, meaning tariffs that match another country’s tariff rates and perceived trade barriers, regardless of the USMCA or other free trade agreements. In response, Prime Minister Justin Trudeau announced 25% tariffs on U.S. goods totaling around USD $107 billion, with $20.7 billion going into effect immediately and the remaining $86.3 billion coming soon. Trudeau has also stated that Canadian retaliatory tariffs will not be removed until all U.S. tariffs are removed.
• Mexico Tariffs: Blanket tariffs of 25% on Mexican imports were implemented on March 4. On March 6, President Trump announced a temporary pause on tariffs for Mexican goods covered under the USMCA agreement. Starting April 2, Mexico will face reciprocal tariffs, regardless of the USMCA.
• Sector-Specific Tariffs:
  • Automotive Industry: The global automotive industry faces a significant shift as 25% tariffs are set to take effect starting April 2. Under the USMCA, North American automakers secured a brief extension, delaying the implementation to April.
  • Semiconductors: With semiconductors in critical shortage, the proposed 25% tariffs on imports are expected to exacerbate supply chain bottlenecks for assembly-heavy industries like Class 8 trucks.
  • Steel and Aluminum: The steel and aluminum industries’ 25% tariffs were implemented March 12. These tariffs will greatly impact the prices of class 8 trucks, and the oil and gas industry, particularly steel pipelines.
  • Venezuelan Oil & Gas: The U.S. will impose 25% tariffs on all goods from nations that import any Venezuelan oil and gas starting April 2. Venezuela produced 921,000 barrels per day of crude in 2024, and of that, 351,000 barrels per day was shipped to China. This means Chinese goods will be subject to a cumulative tariff rate of 45%. Due to the Chevron joint venture ending on May 27, Venezuelan oil will stop being imported to the U.S.

Transportation Impact: 

These tariffs will likely raise operational costs across the transportation industry due to the increased price of imported raw materials and components. For instance, a typical Class 8 truck may contain as many as 500 semiconductors within its system. Imposing a 25% tariff is expected to drive up the cost of these trucks. Higher prices may also reduce consumer demand, leading to reduced hiring and layoffs as companies attempt to hedge against both the uncertainty of tariff policies and higher prices. While the situation is fluid, these tariffs, if fully implemented, would affect $1.4 trillion-worth of imports to the U.S. and bring U.S. tariff rates to levels not seen in 80 years.

Energy prices, particularly in PADDs 2 and 4, will be impacted. In 2023, Canada and Mexico supplied more than 71% of U.S. crude oil imports, with around 60% of U.S. crude oil imports coming from Canada. Canadian crude oil is largely delivered by pipeline from Alberta to the U.S. and will likely be diverted for export to global markets or a production curtailment policy will likely be instated to bolster prices.

Retaliatory tariffs could create disruptions to supply chains and introduce significant uncertainty into investment decisions. Shippers may attempt to avoid tariffs by shifting production to the U.S., which is the stated goal of the Trump administration. It is unclear if announcing manufacturing or supply chain investments in the U.S. by foreign companies will enable them to claim exemptions from certain tariffs.

Federal Reserve Chair Jerome Powell recently emphasized that there is “no hurry” to lower interest rates, as the Fed awaits greater clarity on trade policy decisions and their potential outcomes. Meanwhile, the University of Michigan’s February 2025 consumer sentiment index showed a decline of 9.8% and an index of consumer expectations decline of 7.9%, signaling consumers’ concerns about tariffs and inflation. The recent jobs report showed relatively steady growth, but analysts warn that hiring conditions may weaken in the coming months.

2. National Energy Emergency Declaration

President Trump has declared a "National Energy Emergency" and created a National Energy Dominance Council. Unlike past energy crises rooted in shortages, the U.S. is already a top fossil fuel producer with no supply constraints. According to a March 2024 article from the U.S. Energy Information Administration (EIA), the U.S. “produces more crude oil than any country, ever.” With OPEC+'s decision to increase crude oil production in April, the declaration may not have as marked an impact as intended.

Transportation Impact:

By declaring an emergency, President Trump can leverage greater executive authority and use broader administrative tools to advance his stated aims, including eminent domain, the Defense Production Act, or limiting the need for environmental reviews, among others. Trump's declaration also aims to roll back environmental regulations, support coal and fossil fuel industries, and counter policies promoting renewable energy and electric vehicles. Supporters argue this strategy revitalizes the traditional energy sector. Critics, however, warn it could undermine sustainability progress and long-term emissions reduction, raising concerns about the broader impact on global energy markets and climate initiatives.

What remains to be seen is if or how the administration may leverage the Emergency Declaration for biofuels. Historically, biofuels have been a strong point of focus for Republican lawmakers, who may now see the Emergency Declaration as a way to support biofuel producers in their states or congressional districts through reduced regulatory requirements.  

3. 2009 Endangerment Finding

Environmental Protection Agency (EPA) Administrator Lee Zeldin has reportedly called on President Trump to overturn the Endangerment Finding—along with the Cause or Contribute Finding—which could pave the way for dismantling key climate regulations. This move would potentially revoke major policies, including the Heavy-Duty Vehicle Emissions Standards. This development would hinder any efforts to regulate greenhouse gases going forward.

• The Endangerment Finding states that six greenhouse gases are threats to the public health and welfare of current and future generations.
• The Cause or Contribute Finding states that the combined emissions of these greenhouse gases from new motor vehicles or motor vehicle engines contribute to the greenhouse gas pollution that threatens public health and welfare.

Transportation Impact:

If these developments unfold, states could emerge as the primary drivers of vehicle emissions standards, with states holding the greatest market influence—most likely California—potentially shaping standards on a national scale. However, Congress is actively working to curtail California’s authority to set these standards at the same time the administration explores how to dismantle the Endangerment Finding. These actions signal a pivotal moment for the future of emissions regulation, with significant implications for sustainability and innovation within the transportation industry.

4. National Environmental Policy Act (NEPA)

In an interim rule, the Trump administration has rescinded the Council on Environmental Quality's (CEQ) role and proposes to decentralize and devolve NEPA management back to each individual agency.

NEPA mandates that any major infrastructure project funded or approved by the federal government undergo a thorough environmental impact analysis before receiving permits. Since these projects often involve multiple agencies, the CEQ was established at the executive level to coordinate these efforts. Since its creation in 1969, the CEQ has played a pivotal role as the central authority for NEPA interpretation and management of processes, terminology, and timelines, and maintain uniform standards across environmental reviews.

Transportation Impact:

Each federal agency will need to determine its own standards, processes, terminology, and timeline to comply with NEPA. This process could take years and may leave federal agencies open to more lawsuits in the long run.

A decentralized approach to NEPA may create more complexity for project developers, given the potential for differences in interpretations that may arise among the various federal agencies. Under the CEQ system, NEPA analyses averaged three years. A decentralized approach seems unlikely to speed up the process.

5. Government Efficiency Measures

The Department of Government Efficiency’s (DOGE) mass layoffs—totaling at least 300,000 federal and probationary employees—are creating resourcing gaps in agencies such as the EPA and Department of Transportation. Federal funding that has been allocated and awarded is also not being distributed consistently, which has resulted in some companies reducing operations or laying off workers.

Transportation Impact:

Mass civil service layoffs and contractor impacts could disrupt the federal government, but the timing and scale remain uncertain. Republican budget proposals may further strain agency funding, particularly for climate initiatives and support for disadvantaged communities.

6. Securities and Exchange Commission’s (SEC) Climate Disclosure Rule

Acting SEC Chair, Mark Uyeda, has directed agency staff to request the U.S. Eighth Circuit Court of Appeals to postpone arguments on the SEC’s climate-risk disclosure rule. Industry experts project that the SEC may take further steps to distance itself from the rule, signaling a potential shift in regulatory priorities.

Transportation Impact:

Shippers with sustainability goals may face reduced federal pressure to disclose carbon footprints, but the drive for eco-friendly practices persists. Consumer demand for sustainable products remains strong, and the cost efficiencies and emissions reductions achieved through sustainability initiatives make them a strategic advantage.

Climate disclosure reporting requirements still exist in California (SB 253 and SB 261) and the European Union (CSRD), although they have both proposed or enacted measures to reduce the stringency of the reporting requirements and timelines.

7. Paris Agreement Withdrawal

The U.S. withdrawing from the Paris Climate Agreement reverses commitments to reduce emission levels and collaborate globally on sustainability. This decision, effective in a year, undermines global climate goals and the U.S.’s emission targets. Critics warn this move could weaken America’s leadership in global climate efforts and embolden other nations to ease their commitments.

Transportation Impact:

Over the long term, a lack of U.S. leadership on the climate crisis and international collaboration could hinder the global effort to reduce emissions. This slower progress would exacerbate climate challenges, leading to more severe and widespread impacts.

Understand transportation policy impacts with Breakthrough's expertise

The transportation industry continues to face significant changes due to new federal policy updates. These updates have far-reaching implications for various sectors within the transportation industry, including shippers, carriers, 3PLs, energy producers, and supply chain stakeholders. The key to success will be staying informed and adapting accordingly to maintain efficiency and competitiveness. Subscribe to Breakthrough's blog to gain access to expert analysis, trends, and strategies that will help you navigate the evolving transportation landscape with confidence.