Union Pacific CEO signals caution on Trump's China tariff threat




  • In US
  • 2019-06-19 22:54:31Z
  • By By Anna Driver and Lisa Baertlein

By Anna Driver and Lisa Baertlein

NEW YORK/LOS ANGELES, June 19 (Reuters) - Union Pacific Corp's chief executive said another round of tariffs on Chinese goods could badly hurt his railroad and the U.S. economy, but he feels U.S. President Donald Trump is listening to his concerns.

CEO Lance Fritz listed trade as one of the reasons the company has taken a more negative tone in its growth outlook. The trade wars, along with slowing industrials and devastating floods in the U.S. Midwest, have weighed on the railroad's prospects in recent months.

He said there is no doubt that the threat of 25% tariffs on an additional $300 billion in Chinese imports caused him significant concern. He met Trump on Friday.

"I was heard, understood and that's better access than we've had in a long time," Fritz said.

The Omaha, Nebraska-based company's rail network covers 32,000 route miles (51,000 km) in the Western two-thirds of the country and includes the Los Angeles/Long Beach port complex, which handles the most China ocean cargo in the United States.

"It's hard to say how quickly (the threatened tariffs) would show up in my top line, but that would be a pretty significant risk to us," Fritz said at a meeting with Reuters editors and reporters on Wednesday.

Fritz's comments underscore the risk that Trump's trade war with China poses for the U.S. economy. After talks stalled, Trump and Chinese President Xi Jinping are due to sit down at the G20 Summit in Osaka, Japan later this month.

Union Pacific expects 2019 volume growth in the low single-digit percentages. Volume fell 2% in the first quarter and 4% in the second quarter. Floods in the Midwest hampered Union Pacific's business in the first half of the year, along with concerns about the trade spat with China.

Fritz would not say how much of Union Pacific's business originates and terminates in China, but said Asia accounts for an important portion of its revenue.

U.S. exports to China tumbled 30% in the first quarter, while U.S. imports from China fell 9%, according to International Monetary Fund trade data analyzed by trade credit insurance firm Atradius.

That has hit close to home for Union Pacific, which said in April that agricultural shipments from its home state and around the Midwest tumbled since China slapped retaliatory tariffs on U.S. soybeans. The railroad's agriculture products revenue fell 3% to almost $1.1 billion in the first quarter, hurt by a 7% drop in grain carloads due to reduced exports to China.

The pressure increased on June 1, when Washington hiked tariffs on $200 billion of Chinese goods to 25% from 10% and Beijing retaliated by boosting tariffs on $60 billion in U.S. goods to 25% from 5%.

The trans-Pacific standoff comes as the railroad, one of the nation's largest, has been grappling with a softening in the truck market that makes highway shipments more competitive with rail. (Reporting by Lisa Baertlein in Los Angeles and Anna Driver in New York Editing by Bill Rigby)

COMMENTS

More Related News

Democrats, Republicans to seek reversal of Trump Syria pullback: Pelosi
Democrats, Republicans to seek reversal of Trump Syria pullback: Pelosi

The top congressional Democrat said Monday she had agreed with Republicans on the need for a resolution to overturn Donald Trump's "dangerous" troop withdrawal from northern Syria, as the US president threatened tough sanctions against Ankara. House Speaker Nancy Pelosi also said congressional

Pentagon chief vows to cooperate with impeachment probe
Pentagon chief vows to cooperate with impeachment probe

US Defense Secretary Mark Esper said Sunday the Pentagon would cooperate with the congressional impeachment inquiry -- in an apparent break with President Donald Trump's policy to thwart the probe. Esper said his department would try to comply with a subpoena from House Democrats seeking records

Inside look at Melania Trump
Inside look at Melania Trump's daily diet, including her favorite meal

A former model, Melania is no stranger to a healthy lifestyle.

Hunter Biden Steps Down from Chinese Board as Trump Attacks
Hunter Biden Steps Down from Chinese Board as Trump Attacks

(Bloomberg) -- Hunter Biden is stepping down from the board of a Chinese-backed private equity company and promising to forego all foreign work if his father, former U.S. Vice President Joe Biden, is elected president in 2020.After months of keeping a relatively low-profile as President Donald Trump leveled a barrage of unsubstantiated accusations of corruption at him, the younger Biden is publicly vowing to avoid any conflict of interest.According to a statement released on his behalf by his lawyer George Mesires, Biden said he'll resign at the end of the month from the management company of a private equity fund that's backed by Chinese state-owned entities. He also pledged that he...

Trump backs Rudy Giuliani after report says president
Trump backs Rudy Giuliani after report says president's lawyer is under investigation

"So now they are after the legendary 'crime buster' and greatest Mayor in the history of NYC, Rudy Giuliani," Trump wrote in a tweet on Saturday.

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

Top News: US

facebook
Hit "Like"
Don't miss any important news
Thanks, you don't need to show me this anymore.