The recent tariff war threatens to undo the economic progress created by the Trump Administration’s deregulation and tax reform achievements, warns Union Pacific Railroad President Lance Fritz.
Speaking at the National Press Club in Washington, DC, on July 12, he said the immediate impact seen by his company is that steel tariffs increased the average cost of a constructing one mile of railroad track from about $3 million to $3.75 million.
“I have heard very positive news from our customers that say that both tax reform and the sensible approach to regulation are generating strong consumer optimism, generating demand for them, and growing their confidence in capital investment,” Fritz noted.
“But our potential exit from NAFTA, along with a growing list of tariffs and escalating trade tensions with our trade partners, threatens to undo much of our progress.”
He also pointed out that the jockeying over tit-for-tat tariffs hurts the economy by creating business uncertainty, citing the example of a ship stranded off the California coast for four weeks during a dispute over who would pay the $6 million tariff on its load of steel.
NAFTA negotiations are a particular concern for Fritz because UP handles about 70% of the rail business to and from Mexico. He cited the example of Midwestern farmers who ship soybeans to Mexico for processing – as well as to China.
Because a bumper crop of soybeans has driven prices down, the trade war threatens American farmers with financial disaster, Fritz explained.
UP also does a lot of business with Canada, and tariffs on Canadian lumber will drive up the average cost of a house in the U.S. by $9,000, he claimed.
“The best outcome is let’s close this baby up quickly, let’s stop picking fights with some of our trade partners, and let’s focus our full attention and might on the issues at hand, which is fair and equitable trade investment with China,” Fritz said.