The CEO of one of the largest railroad networks in the U.S. said the tariffs President Donald Trump put on Chinese goods is hurting the U.S. railroad industry as well as farmers and other members of the agricultural economy.
“What drives the railroad is people buying stuff, the industrial economy being healthy and trade,” said Lance Fritz, CEO, chairman and president of Union Pacific Corporation (UNP), on Yahoo Finance On the Move. “Tariffs are going to directly impact trade, and they can indirectly impact the other two as input costs change.”
United States hiked tariffs on $200 billion worth of Chinese goods at 12:01am ET Friday to 25% from 10%. Talks between the U.S. and China resumed in Washington D.C. but wrapped up by midday. Nonetheless, U.S. Treasury Secretary Steven Mnuchin called the talks “constructive.”
While Trump tweeted there was “no need to rush” to reach a deal, others disagree.
Fritz said U.S. farmers are getting hit hard. “If you go back to this time last year, China was in the U.S. market for soybeans and probably bought about 40% of soybean exports,” he said. “Right now, they are not in the market at all.”
Fritz said those soybean farmers have to find other world markets to send their crop. That’s something he believes has had a depressive impact on soybean prices and that “has a spill-through impact on the economy, and the agricultural economy.”
Union Pacific connects 23 states in the western two-thirds of the U.S. by rail. It is considered an important link in the global supply chain connecting the Canadian rail lines with the Gulf of Mexico. Union Pacific’s rail network currently covers nearly 32,000 miles.
This week Union Pacific celebrated the 150th anniversary of the first U.S. Transcontinental Railroad.
Joanna Campione is a producer for Yahoo Finance On the Move.