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2025 should have been a key year for the non-road equipment industry to steadily recover after a series of shocks such as the COVID-19 pandemic, the conflict between Russia and Ukraine, and the difficult situation in 2024. However, the most worrying issue for the industry at the moment is the impact of Trump's tariff policy on global demand for non-road equipment and its parts.

Global stock markets were broadly lower on rising trade tensions, with the S&P 500, Nikkei and FTSE 100 all falling about 10% in the week following President Trump's tariff announcement.

Tariffs have an inflationary effect, increasing consumer costs and reducing disposable income, which in turn depresses demand for consumer goods, affecting demand for areas such as warehousing and forklifts. If companies bear the cost of tariffs themselves, profitability will be affected, resulting in reduced investment in capital projects or equipment.

Take the United States as an example. Its economy is already facing many uncertainties as it enters 2025. As shown in the figure:

Year-over-year growth in total U.S. construction spending has been slowing in recent months and is trending toward negative growth.

The 12-month rolling average of U.S. housing permits has remained sluggish over the past year, weighed down by rising borrowing costs and high inflation.

In 2025, new orders for construction machinery in the United States have been on a downward trend, but inventories remain high. Tariffs are bound to push up costs for American consumers and businesses, and further increase the prices of machinery and equipment. This is undoubtedly a further blow to the already shaky US non-road equipment market. 2025 may be a very challenging year for the market. But is there really no chance of a turnaround?

Where does this leave off-road equipment manufacturers?

Although the details of the tariffs are still unclear, manufacturers have been preparing for them months in advance.

Cost Sharing

OEMs have proactively asked component suppliers to bear the full cost of tariffs if necessary. This behavior shows that OEMs are trying to avoid passing on additional costs to end users in order to maintain product price stability. In fact, suppliers may try to share this part of the cost with OEMs. In the current situation, communication is crucial and OEMs need to ensure that their partners can fight alongside them.

Wait and see

Many suppliers are currently choosing to wait and see, waiting for the situation to become clear. Why are they so cautious? On the one hand, Trump's policy style is considered unpredictable, and the tariff policy may be canceled at any time, or even have the risk of further escalation. Therefore, suppliers choose to wait and see before deciding whether to adjust the production location or supply chain to avoid potential risks brought about by blind decision-making.

Long-term planning

It usually takes several years to adjust the production location of a complete machine or engine. The United States will usher in a new government in three years. When planning manufacturing bases, companies are now more inclined to consider long-term strategies rather than just responding to short-term tariff pressures. Many equipment manufacturers and parts suppliers still want to maintain production in the United States because no matter how tariffs change, the United States is a large and high-value market that is crucial to future development.

in conclusion

Trump’s tariffs are undermining the momentum of the global off-road equipment market’s recovery in 2025. This is undoubtedly a new challenge for a market that has just emerged from a difficult period in the past five years. However, the key now is to remain rational and realize that tariff issues are not inflexible. The tariff situation is dynamic in nature, not a set in stone. We will continue to monitor developments and ensure that market forecasts reflect the latest developments by updating research and analysis.