Transpo tariff turmoil continues – how it affects the Hoosier State
Editor’s Note: This story was originally published in the April 18, 2025 issue of Indiana Transportation Insight.
Hey, didn’t we just talk about tariffs?
Yes, but . . . changes relating to the international tariffs imposed by President Donald Trump (R) are moving at warp speed: hour-to-hour, minute-to-minute. They are changing the economy broadly and in unprecedented ways, forcing all industries to adapt, especially within the world of transportation. Trucks, automobiles, ports, freight, public transit – all sectors are contending with the changes and attending uncertainty. You’ll recall our portending some of that turmoil back in our February 21 issue.
Even with the 90-day pauses placed on tariffs aimed at Canadian and Mexican goods, the President imposes a massive, active 125% (if you count the previous, fentanyl-related 20% Chinese tariff, it’s more like 145%) tariff on China that is impacting the U.S. economy and beyond in real time.
If that wasn’t enough, we also have retaliatory tariffs being lobbed at the United States. China’s Ministry of Finance raised tariffs on American goods from 84% to 125%, calling the increases an “imposition of abnormally high tariffs.” In case the country’s position wasn’t clear enough, Chinese Foreign Affairs Ministry spokesperson Mao Ning took to X to post archival footage of People’s Republic of China founder Mao Zedong with the caption, “We are Chinese. We are not afraid of provocations. We don’t back down.”
No state east of the Mississippi River exports a greater dollar value of goods to China than Indiana, which sent $6.1 billion worth of products to China in 2023, according to the U.S.-China Business Council. More than 10% of our global goods exports went to China in 2023, with the fourth-largest category of our exports to China being motor vehicle parts.
Meanwhile, according to The President via Truth Social, America is “doing really well on our TARIFF POLICY. Very exciting for America, and the World!!! It is moving along quickly.”
U.S. Sens. Todd Young (R) and Jim Banks (R) aren’t staying quiet, either. Sen. Young admits to (his fellow Carmel High School alum) Steve Inskeep of NPR that, while he supports President Trump using “the powers that Congress has delegated to him,” Hoosiers Back Home are “asking for more clarity … [for] Congress to right the balance.” In an op-ed for Newsweek, Sen. Banks throws his political weight behind the tariffs, writing that the trade taxes are “resetting a system that had been rigged against the American people.”
Sen. Banks referenced Honda and General Motors ramping up production in Indiana as a result. By the way, Honda never confirmed President Trump’s big talk during his address to Congress in March (and twice subsequently) about Civic model production being moved to Indiana, adding another layer of confusion.
We’ll walk you through the ripple effects in Indiana.
Economists are Concerned
Ball State University economist Michael Hicks doesn’t believe the tariffs’ impact on Indiana transportation will be short-lived. The professor warns WISH-TV Indianapolis reporter Ashley Fowler that the tariffs and the climate they’re creating may result in higher prices in Indiana for cars and other goods, decreased demand for U.S. exports, and potentially a recession if sustained.
Dr. Hicks also emphasizes the risk of long-term damage to supply chains, citing how U.S. soybean exports to China were supplanted by Brazilian suppliers following earlier tariff discussions. A 25% general tariff on imported vehicles and auto parts, effective April 3, already caused a surge in car purchases for March as consumers attempted to avoid price hikes. Anticipatory sales rose past projections of 13.6% to almost 1.6 million units, bringing total sales for the first quarter to over 3.9 million vehicles.
In a different interview, Hicks, director of BSU’s Center for Business Research and Economics tells WVPE 88.1 Elkhart/South Bend reporter Jeff Parrott that he believes the pending tariffs on Canada and Mexico could deeply injure Elkhart’s RV industry.
Dr. Hicks explains that one-third of car and RV parts are imported, causing “a big cost shock to producers of RVs … so that’s going to immediately affect the price of RVs, which were just beginning to recover.” As RVs are not an essential item for consumers, Dr. Hicks asserts that the negative impact will be compounded if the anticipated recession takes hold (we’ve told you here and for many years in our Hannah News Service sister newsletter INDIANA LEGISLATIVE INSIGHT that the Hoosier RV industry is the national canary in the coal mine for a widespread recession; RV sales are first to contract and last to rebound in tough economic times). The Ball State economist also tells Parrott not to underestimate market discrimination against U.S. exports from offended consumers in Canada, which may further disadvantage American-made RVs. Even if Canadians aren’t foaming at the mouth to snub Hoosier RVs, Dr. Hicks points out the higher prices that Canadian consumers will see due to retaliatory tariffs will naturally segregate the market.
Dr. Hicks is in good company. Economists en masse, including Dr. Phillip Powell, executive director of the Indiana Business Research Center in the Indiana University Kelley School of Business, caution that these tariffs could lead to inflation, reduced demand, and a potential recession, and that any consumer benefits could be fleeting.
UBS Wealth Management Chief Economist Paul Donovan warns Christopher Rugaber of the Associated Press that this reprieve may be short-lived as the full impact of the large tariffs on Chinese goods sets in, even with the 90-day pause for other countries. While supporters argue that the tariffs will boost U.S. production, challenges such as labor shortages and inadequate infrastructure persist.
Nobody Understands This Thing
Everyone from laypeople to industry leaders is uncertain how to best navigate the tariffs’ choppy waters.
Right now, we’ve learned that there are dozens of Audis sitting stagnant in the Ports of Indiana, the supply chain uncertain what to do with them after Volkswagen “paused” all U.S. imports on April 2 until further notice after the President announced his 25% auto import tariff on all foreign vehicles. That’s 37,000 vehicles sitting around in the U.S. inventory. Audi is in a particularly difficult spot, considering its best-selling American model, the Q5, is manufactured in Mexico. Mitsubishi followed Audi’s lead on April 14.
Ports of Indiana Communications Director Eric Powell tells your favorite transportation newsletter that POI’s tenants are mostly the companies “directly in the line of fire over tariffs,” including Audi, and they are taking “a ‘wait and see’ approach.” In other words . . . nobody understands this thing. While no major operational changes have been announced by POI, when everything is TBD, anything could be on the table.
Exemplifying that, President Trump told reporters in the Oval Office on April 14 that he’s noted the supply-chain Audi issue and is contemplating granting car companies a temporary tariff exemption, implying that even he is reacting in real time to how changes are affecting the U.S. economy. The president acknowledges that car companies moving foreign production back to the States may be reeling after the tariffs (more on how that’s affecting Hoosier companies in a minute).
Direct Impact
Let’s zoom in a bit closer on Hoosier transportation.
Automobile manufacturer Stellantis temporarily laid off around 900 U.S. employees due to challenges created by President Trump’s latest automotive tariffs. The layoffs affect plants in Michigan and Indiana, including the Indiana Transmission Plant, Kokomo Transmission Plant, and Kokomo Casting Plant. Stellantis is also pausing production at its Windsor, Canada, assembly plant for two weeks and its Toluca, Mexico, assembly plant until May 7. Stellantis COO Antonio Filosa tells WXIN-TV Fox 59 Indianapolis reporter Matt Christy that the company views the layoffs as “necessary” given violent market fluctuations due to tariff yo-yo-ing. No specific timeline for an end to the Indiana and Michigan layoffs has been provided.
General Motors takes a different approach. GM plans to increase full-size pickup truck production at its massive Fort Wayne Assembly plant, which, as the moniker implies, assembles the Chevrolet Silverado 1500 and GMC Sierra 1500 trucks. This move is expected to add 225 to 250 temporary jobs to the facility, which currently produces about 1,300 trucks daily and employs approximately 4,100 workers. The plant will undergo an interim period from April 22 to April 25 to implement the necessary changes for the production boost.
This particular addition to the Hoosier job inventory in response to the President’s imposition of foreign tariffs was greeted positively when it occurred by Sen. Banks, who used to represent the congressional district in which the plant is sited. “Today’s announcement from General Motors is great news for Hoosiers,” said Sen. Banks on April 3. “It hasn’t even been 24 hours and President Trump’s plan is already delivering for working families in Indiana in a big way.”
To be clear, this is only happening in Fort Wayne. GM is not ramping up truck production across the board. Redirecting production to Indiana – and away from Canadian and Mexican imports – could represent GM taking a stab at offsetting the incoming tariff impacts. While General Motors spokespeople haven’t commented directly on their motivations, it’s hard to ignore that the move also creates an interesting juxtaposition against, say, Stellantis choosing to take away American jobs and places GM in a holier light, given current national objectives. The company is doing exactly what President Trump is hoping for – redirecting jobs and resources back to domestic means. Ford is taking a similarly patriotic approach by offering Hoosier workers discounted “employee pricing” through a program called “From America, for America” through June 2.
However, on April 14, trucking distribution company Fastenal, which has several distribution centers and fulfillment centers in Indianapolis, pivoted away from Trump’s intended domestic effects. Fastenal is both hiking prices by three percent to eight percent, and shipping products directly to Canadian and Mexican customers that would have previously been brought to the U.S. Many trucking companies are feeling threatened by the tariffs – along with just about everyone else. An April 8 FleetOwner poll revealed that more than one-half of U.S. transportation industry respondents “said they expect the trade taxes to impact their business negatively.”
The economic uncertainty caused by the tariffs is hitting public transit, too. A $125 million bond sale from the Indianapolis Local Public Improvement Bond Bank (ILPIBB) to IndyGo was recently complicated by market volatility. The proceeds would be directed towards the Blue Line, which spans 24 miles between Indianapolis International Airport and downtown. On April 8, IndyGo Communications Director Lisa Soard tells Bond Buyer reporter Jennifer Shea that the bond bank decided to delay the transaction “until the market corrects.” ILPIBB Executive Director Joe Glass relays to Soard that the bond bank will “continue to monitor the market and go day-by-day.”
Important to note, tariffs are also generating some positive change for Hoosiers. GasBuddy Petroleum Analyst Patrick DeHaan suggested that President Trump’s tariffs may reduce gas costs for motorists – and then the market proved him right (note, however, that lower gas prices for consumers concomitantly results in lower gas tax proceeds for road repairs and construction). DeHaan tells WIBC 93.1-FM reporter Chris Davis that as the tariffs strain and complicate the global economy, oil consumption slows in response, leading to lower prices. Towards the end of March, inflation began to decrease, with gas and even airline fares following suit.
Concurrently, the Organization of Petroleum Exporting Countries recently agreed to increase production for the first time in two years, boosting supplies and consequently lowering oil costs. When Davis asked if the savings are related to the Trump Administration’s “drill, baby, drill” policy, DeHaan replied negatively: “In fact, as a result of the significant drop in oil prices, oil companies are less likely to ‘drill, baby, drill.’”
We’ll continue to keep you updated as tumultuous tariffs trigger transportation [market] transformations.