By David Kelley, CFO Diesel Laptops

In recent months, tariff policy has become a central tool in the global economic and geopolitical playbook. As the current Administration has sought to recalibrate its trade relationships, the diesel engine repair industry is squarely in the crosshairs of evolving import tariffs. These changes carry profound financial implications for manufacturers and distributors and independent and fleet-based repair shops that form the backbone of the diesel transportation ecosystem.  Diesel Laptops is committed to helping strengthen the industry by providing tools and support that drive efficiency.  We also know this current industry obstacle and want to share some insights. 

A Tariff-Heavy Environment: What’s Changing?

Since 2018, the U.S. has implemented a number of tariffs on goods imported from China, the European Union, and other regions. More recently, in 2025, tariffs were more broadly levied in response to national security and trade imbalances. While this blog is not intended to debate the political aspects of these actions, I will address the impact on essential goods related to the transportation and industrial sectors, including automotive and diesel engine parts.

Diesel engine repair shops rely heavily on imported components such as turbochargers, fuel injectors, EGR valves, sensors, and diagnostics hardware are frequently sourced from overseas manufacturers. These parts often fall under the category of tariffed goods, subject to duties ranging from 10% to 25% (or more), depending on the component and its country of origin.  While the tariffs are levied on the OEMs and distributors in other countries, these costs are passed through to the buyers here in the US. 

Rising Costs of Parts and Equipment

The most immediate and visible financial implication for diesel repair shops is the increased cost of goods sold (COGS). Tariffs directly inflate the price of imported components, a cost often passed along the supply chain to the end user.

For example, a high-pressure fuel pump that previously cost a shop $800 from an overseas supplier might now cost $1,000 after a 25% tariff. For shops that stock multiple units and operate with narrow margins, these added expenses accumulate quickly. Bulk purchases of imported parts—common in fleet servicing operations—can increase total parts expenditures by thousands of dollars monthly.

Moreover, diagnostic equipment and software subscriptions, which rely on imported components or international intellectual property, have seen price increases as suppliers adjust to tariff-driven cost structures. Repair shops that use advanced diagnostics tools to interface with ECMs (engine control modules) face steeper upfront costs and subscription fees—capital expenditures that must be amortized over time.

I recognize that this is intended to level the paying field and drive more investment in the US, but that is the long-term play, and the short-term result will be higher costs until the trades are balanced.

Margin Compression and Pricing Pressures

With higher costs, repair shops face a difficult choice: absorb the additional expenses or pass them on to customers. For many independent repair shops, passing costs directly to customers risks losing business to lower-cost competitors. Yet, absorbing the increases can rapidly erode profit margins, especially in a high-volume, low-margin business.  But understand that all of the repair shops in the US face the same battle. 

This dynamic is particularly challenging in fleet maintenance agreements, where prices are often locked in via long-term contracts. Repair shops bound by multi-year agreements may find themselves delivering services at reduced profitability, or even at a loss, as component costs continue to climb due to tariffs.  At Diesel Laptops, we honor our long-term commitments to our customers both in pricing and service levels. 

Fleet operators, meanwhile, are not immune to the ripple effect. Higher repair costs translate to increased cost-per-mile for their vehicles, putting pressure on freight rates and profitability across the logistics ecosystem. Ultimately, this leads to inflationary pressure across the supply chain—affecting everything from retail prices to agricultural exports.

Cash Flow and Working Capital Challenges

As the Wu-Tang Clan says, "Cash Rules Everything Around Me." Cash flow management is a perennial concern for all businesses, including diesel repair shops, many of which are small—to mid-sized businesses with limited liquidity. Increased tariffs amplify this pressure in several ways.

First, parts suppliers may raise prices with minimal notice, forcing repair shops to increase inventory purchases quickly before further hikes occur. This ties up more capital in inventory, reducing available cash for payroll, utilities, and other operational expenses.

Second, delayed customer payments—common in B2B fleet servicing—strain liquidity further. Shops are now fronting higher costs for parts and labor, but often wait 30, 60, or even 90 days to get paid. Without strong financial planning or access to revolving credit, some shops may be unable to maintain adequate inventory or meet payroll obligations.

To mitigate these effects, shops can renegotiate terms with suppliers, seek volume discounts, or shift to just-in-time inventory models. To improve cash flow flexibility, shops can also explore alternative financing solutions, including invoice factoring and asset-based lending.

Supply Chain Disruption and Strategic Sourcing

Tariffs are only one piece of a broader supply chain puzzle. Over the past five years, we’ve had our share of adversity in this area. Let us not forget the COVID-19 pandemic, semiconductor shortages, and conflicts in Eastern Europe. Tariffs are another data point to add to the stack and make us rethink our global sourcing strategies.

Many diesel repair shops and parts distributors are now reevaluating their supply chains. Domestic or nearshore sourcing is gaining traction, though not without tradeoffs. U.S.-manufactured parts may be tariff-free, but they often come with higher labor and production costs. Lead times can also vary, especially for niche components or proprietary systems.

Shops should be diversifying their supplier base, building strategic partnerships with domestic manufacturers, and even investing in remanufacturing capabilities to recycle parts and reduce dependency on imports. If you have the capability, I recommend leveraging data analytics to forecast part usage more accurately and reduce the need for emergency procurement at premium prices.

Investment in Technology and Automation

I am a huge fan of automation, and Diesel Laptops has embraced technology throughout the organization.  Automation for the right purpose is critical to continuous improvement and efficiencies.  While increased tariffs pose challenges today, they also present an opportunity for diesel engine repair shops to rethink their business models. Repair shops can use this moment to invest in technology— diagnostic solutions, automated inventory systems, AI-driven diagnostics platforms, and workflow management software—that can drive efficiency and reduce waste. 

AI-driven predictive maintenance and monitoring platforms, such as our Preteckt product, can help fleet operators identify failing components before a breakdown occurs. This allows for planned repairs and bulk part purchases at lower prices. This reduces unplanned downtime and enables shops to optimize labor deployment and parts usage.

Though these platforms require upfront investment, their long-term ROI, especially in a high-cost environment, can offset some of the margin compression caused by tariffs.

Long-Term Strategic Outlook

Looking ahead, the diesel engine repair industry faces a complex and evolving landscape. Tariff policy is inherently political and can shift rapidly with changes in administration or international relations. Shops that adopt a proactive, rather than reactive, financial strategy will be better positioned to weather these changes.

Key strategies to consider include:

• Diversifying supplier networks (domestically and internationally) to mitigate single-source risk.
• Investing in financial planning tools to model scenarios and protect margins.
• Adopting technology-driven efficiencies to streamline operations.
• Strengthening relationships with customers to justify price increases through value-added services.
• Building capital reserves or securing flexible credit lines to manage liquidity in volatile periods.

Conclusion

The increased tariffs on imported diesel engine parts and equipment are reshaping the financial realities of the diesel repair shop industry. The impact is immediate and long-term, from rising input costs and squeezed margins to disrupted supply chains and increased working capital demands. However, shops that strategically adapt, through more innovative sourcing, technology investment, and financial planning, can survive and thrive in this new landscape. For those willing to innovate, the current disruption may be less of a roadblock and more a catalyst for long-overdue transformation.