Union Pacific’s top executive described as “troubling in a number of ways” President Trump’s plan to levy steep tariffs on imported steel and aluminum.
Speaking at a local World Trade Center reception at the Port of New Orleans March 1 shortly after Trump announced his plan, Union Pacific President and Chief Executive Lance Fritz hailed the administration for its aim to “hold our trading partners accountable to live in the context of free and fair trade,” but cautioned against rising protectionist sentiment, adding, “I don’t know that the tariffs that are being contemplated are the right remedy.”
“In today’s environment, there’s a number of our U.S. citizens…who think that they’ve lost their job as a result of international trade,” said Fritz, the head of the largest U.S. railroad. “And to some degree, they’re right – there is a portion of logic there, but it’s grossly misrepresented” and “not the big story.”
He cited research by Ball State University that concluded nearly 88% of job losses in manufacturing were the result of automation and productivity gains.
“If you read the papers, you’d think that manufacturing is dying…we’re just doing it with less people, and that’s mostly about productivity.”
Regarding Trump’s repeated assertion that the North American Free Trade Agreement should be renegotiated because it has been “a catastrophe,” Fritz disagreed. “NAFTA has turned into a dirty word. NAFTA’s really been a boon for us.”
Union Pacific is a major link in the global supply chain, and serves 23 states in the western two-thirds of the U.S.
Fritz said that “[T]he administration has done a great job on deregulation. I feel that, as all business and all my customers feel it,” adding that he’s met with federal officials to “spread the gospel of what we all know here, which is closing our border won’t create jobs. It’ll destroy jobs and it’ll destroy the jobs that the president believes he was elected to grow.”
Punitive tariffs on steel and aluminum would likely roil Louisiana’s economy, as Mexico is one of the state’s top trade partners.
Caitlin Cain, CEO of the World Trade Center of New Orleans, said that at least 35% of rail revenue is directly associated with international trade.
“The strength of the global supply chain is incredibly important to the work of Union Pacific, and incredibly important to the work that we do, and the World Trade Center of New Orleans,” she said.
Brandy Christian, president and chief executive of the Port of New Orleans, said the gateway is particularly sensitive to tariffs on imported steel and aluminum. Nearly 2.5 million tons of imported steel entered the port in in 2017, or 30% of its total general cargo tonnage. And, approximately 60% of the grain exported from the Midwest goes through south Louisiana ports.
“Port NOLA supports the enforcement of all trade agreements, but an across the board action fails to recognize those countries playing by the rules,” Christian said.