The uncertainty over NAFTA worries intermodal execs

By: | Issue #656 | at 07:35 AM | Channel(s): International Trade  

Audi facroty located in MexicoIn May, executives from 32 large U.S. corporations, including some of the nation’s largest intermodal companies, sent a letter to President Trump urging him to build on a trading relationship that is “already working well.” But the President seems to be leaning in another direction and it has intermodal executives eyeing the negotiations like hawks.

It’s well known that President Donald Trump campaigned against NAFTA in the lead-up to last November’s election, calling it “the worst trade deal ever.” After he took office in January, Trump warned the United States would leave the North American Free Trade Agreement if the deal wasn’t renegotiated favorably to the US.

That made a lot of US business leaders nervous, not only importers and exporters, but also companies that provide crossborder transportation and logistics services, including the North American Class I railways. Higher tariffs and less-favorable trade conditions, whether through a renegotiated NAFTA or a scrapping of the treaty, would be bad for their businesses.

In May, 32 CEOs of large US corporations—including Lance Fritz, CEO of Union Pacific Corporation, and Patrick Ottensmeyer, CEO of Kansas City Southern—sent a letter to Trump asking him to be sensible about the changes he would negotiate in NAFTA. “We should build on the elements of our trading relationship that are already working well,” was the gist of their message.

A few weeks later, US Trade Representative Robert Lighthizer unveiled the Trump administration’s NAFTA priorities, and the CEOs surely breathed a sigh of relief. Deficit reduction (with Mexico) was included as a major objective as was market access issues with Canada with respect to dairy, wine, and grain. The negotiating objectives also included adding a digital economy chapter and incorporating and strengthening labor and environment obligations that are currently in NAFTA side agreements. Negotiations among the three countries began in mid-August; a second round convened in Mexico after Labor Day.

But, as is his wont, Trump threw a monkey wrench into what seemed to be a reasonable NAFTA renegotiation process. In a campaign-style rally in Phoenix on August 22, Trump said that “we’ll end up probably terminating NAFTA at some point.” “Probably,” the president added, for emphasis.

All of this raises the questions, where does this leave NAFTA and where does it leave crossborder intermodal? The rail chiefs, along with their fellow CEOs, can’t rest quietly just yet…


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Peter Buxbaum's avatar

American Journal of Transportation

More on Peter Buxbaum

Peter Buxbaum has been writing about international trade and transportation, as well as security, defense, technology, and foreign policy, for over 20 years. Besides contributing to the AJOT, Buxbaum's work has appeared in such leading publications as Fortune, Forbes, Chief Executive, Computerworld, and Jane's Defence Weekly. He was educated at Columbia University.