‘The world will not do something stupid,” famed investor Warren Buffett recently said when arguing that a trade war between the U.S. and its major trading partners is not as imminent as some say. The privately owned freight rail industry, which moves billions of tons to market for just about every part of the U.S. economy — most especially automobiles made in Michigan — certainly hopes that is the case. Limiting commerce for U.S. consumers and businesses is not only unnecessary, but counter to the continued growth of a rather healthy United States economy.
The Trump administration and elected leaders in Congress should work in the coming weeks and months to enact and maintain free trade agreements that put the U.S. economy and workers on the best possible footing to succeed.
This first means finalizing an update to the North American Free Trade Agreement, the trilateral pact between Canada, Mexico and the U.S. enacted in 1994 to allow for the flow of goods across these borders largely without burdensome tariffs.
Abandoning the pact was never a wise or realistic idea, as it is simply too important to our daily lives. We are all too used to the immense benefits the deal has had, namely through lower costs for everyday goods. Thus, the White House is currently working to modernize the deal, a worthwhile endeavor given that it is now 24 years old.
Private freight railroads, which alongside trucks and barges serve as the conveyor belt for key products and commodities moved across the continent, believe strongly in the positives of the deal. Industry data show that at least 42 percent of railcar loads and roughly 50,000 quality U.S. rail jobs are directly associated with international trade — much of which occurs in North America. Without NAFTA, some of our biggest customers, from chemical companies to beermakers to aforementioned automakers and their bevy of suppliers, would very likely leave the continent altogether.
More broadly, economists estimate that more than 41 million U.S. jobs today depend on trade. NAFTA alone has boosted the U.S. economy by $127 billion annually.
Major automobile manufacturers exist in today’s economy precisely because of this trade agreement. In 2016, 13 automakers manufactured 12.2 million vehicles in the U.S. — 1 million more than in 1992 before NAFTA — while these companies have also launched 15 new plants, particularly in the Southeast, leading to 50,000 direct and 350,000 indirect auto jobs.
Meanwhile, farmers exported nearly $43 billion in goods in 2016 alone, accounting for more than a third of all U.S. agriculture exports. A sizable portion of these go through the U.S. ports such as the Port of Huron, whose success and ability to employ workers hinges in large part on the sustained movement of goods.
Yet according to the American Action Forum, a NAFTA exit would impact $1 trillion in North American trade and expose businesses to $15.5 billion in new tariffs. And it could jeopardize at least 70,000 jobs throughout the U.S. auto sector, while adding at least $330 to the cost of every new vehicle sold in America.
Ultimately, while agreements can always be improved, and must put domestic workers first, lawmakers should avoid policies that hinder U.S. participation in the global economy.
Edward Hamberger is president and CEO of the Association of American Railroads.