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U.S. trailer orders in February hit 33,000 units, setting a record for the month provided the preliminary figures hold, but concerns are mounting that tariffs on foreign aluminum and steel are pushing up trailer prices.

ACT Research Co. reported that trailer-makers are expected to report their final tallies by the end of the month.

The February activity was the fifth consecutive month that trailer orders exceeded 30,000 units.

“Through the first two months of the year, net orders are 24% above last year, with the industry’s order board more than 20% above this point last year,” said Frank Maly, ACT’s director of commercial vehicle transportation analysis and research.

Backlogs in February should rise above 170,000 units for the first time since early in 2016, according to the research company FTR.

“The trailer market remains red-hot,” said Don Ake, vice president of commercial vehicles at FTR. “The economy is vibrant and producing freight growth across all sectors, which is boosting all trailer segments.”

Ake forecasts orders above 30,000 in March, too.

“You still get the idea that the economy is going to still do a little better than people expect,” Ake said.

The mix of orders is starting to move to growth, said Glenn Harney, chief sales officer at Hyundai Translead.

Those new orders could go into production in October or November, “depending on the model,” Harney said.

The backlog at Stoughton Trailers is into the fourth quarter, said David Giesen, vice president of sales at Stoughton.

At Strick Trailers, there is still some space this year, said Charles Willmott, chief sales officer, Strick Group. “But there may be more soon, as I expect pricing to skyrocket, even with existing orders, because of the new steel and aluminum tariffs.”

President Donald Trump imposed a 25% tariff on steel imports and 10% on aluminum imports. Customs and Border Protection were scheduled to begin collecting the tariffs on March 23, according to the Department of Commerce.

Essentially, the new tariffs were intended to drive purchasers of steel and aluminum to domestic suppliers.

That logic would work if domestic producers of steel and aluminum kept their prices unchanged, Jeffrey Born, professor of finance at Northeastern University, told Transport Topics.

There is evidence to suggest that this is not the case, he said.

Willmott and other trailer-makers agreed.

“Steel suppliers and component suppliers with steel products are canceling contracts, raising prices dramatically, and putting customers on allocation,” Willmott said. “At Strick, we are doing our best to hold down any increases, but the headwinds are fierce.”

Harney said the supply chain is being stressed by shortages of some components and “more urgently” by the impact of the steel and aluminum tariffs and rising prices.

“As we work to mitigate that impact, there could be some cancellations,” he said. At the same time, Hyundai Translead’s labor force is “steady” and does not pose any problem for supporting growth, he added.

Stoughton has had to hold off on new pricing at this point, Giesen said, until there is some certainty in the rapidly rising costs.

“It depends on how high these increases settle out before we know if they will bring down demand,” Giesen said.

Meanwhile, Willmott issued a stern prediction: The tariffs will bring down the economy before Christmas, leading to plenty of labor and capacity in the supply chain.

“This is from a devoted, buy-American advocate, whose standard products are assembled in the U.S. using 97% North American materials and components. I know about the inequity of foreign competition, but the heavy hand of the tariffs is going to implode the economy, in my opinion,” he said.

Born pointed to the potential for accelerated inflation.

His concern is that inflationary pressures are starting to build in the U.S. economy, and these tariffs will make those worse.

“Rising inflation will make nominal interest rates rise even faster, something the Federal Reserve wants to see happen anyway,” he said. “That could ultimately cause the recession, but I think the end of the calendar year is too quick.”

Separately, the Federal Reserve on March 21 raised interest rates a quarter point, putting the new benchmark funds rate at a target of 1.5% to 1.75%.

Meanwhile, the economy and strength in freight and trucking seem to be the biggest drivers of trailer demand, Giesen said.

Harney also said recent tax reform has had some “measurable” impact.

The Tax Cuts and Jobs Act, signed into law in December, means companies are allowed to revalue tax-deferred liabilities as of Dec. 31, 2017, to reflect the new 21% federal corporate income tax rate, down from 35%.

The law also permits full expensing of most types of equipment placed into service between Sept. 27, 2017, and Dec. 31, 2022, according to American Trucking Associations.