Tariffs Not Hurting Railroads — Yet

Although the railroad industry has been warning about being adversely affected by the growing trade war being waged by the Trump administration, those effects have not yet shown up in the most recent freight traffic figures.

Nonetheless it may be too early for that evidence to be appearing.

Just this week Edward Hamberger, the CEO of the Association of American Railroads warned that recently announced tariffs on certain foreign goods will hinder global commerce and could reverse economic progress.

“The president’s more recent trade decisions could reverse that tremendous progress, adding hundreds of billions of dollars in potential costs for American businesses — costs that could ultimately be borne by consumers,” Hamberger and two other CEOs wrote in an op ed column that appeared in the Washington Examiner.

Also writing the column were American Chemistry Council head Cal Dooley and American Petroleum Institute CEO Jack Gerard.

The most recent figures issued by AAR showed that U.S. Class 1 railroads have posted a 9 percent traffic gain through the first six months of the year and a 5 percent gain during June.

“What these tariffs will mean for the overall economy is not clear — their impact will vary from firm to firm and industry to industry, with overall damage depending in part on how long the disputes last and how they escalate,” AAR said last week in its monthly Rail Time Indicators economic outlook.

After the U.S. imposed tariffs on goods coming from China, that country responded by placing tariffs on such American products as soybeans and automobiles.

The U.S. and several European and North American countries have also imposed tariffs on each other’s exports.

Soybean producers were already seeing declining sales to China even before the tariffs were imposed.

During the first four months of 2018, U.S. grain exports are down nearly 7 percent, with soybean exports down 10 percent and wheat off by 22 percent, the U.S. Department of Agriculture reported.

Although intermodal growth this year has been strong, international intermodal container traffic rose just 1.4 percent in June, which might be an indication of slowing traffic.

International intermodal traffic had posted a 7.5 percent increase during the first three months of this year.

Nonetheless, the AAR expects intermodal to set records this year barring  a collapse of international trade.

Anthony B. Hatch, an independent rail analyst with ABH Consulting, told Trains magazine that the Chinese tariffs could have a 6 to 8 percent negative impact on imports of containerized cargo.

Hatch said a strong U.S. dollar has also made U.S. products more expensive aboard.

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