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U.S. exporters, truckers exhale as Trump threats to NAFTA ease

Hearing pleas from the business lobby, as well as individual transportation companies such as UPS and FedEx, the Trump administration has backed off threats to unilaterally sever NAFTA.

By ·
{scmr_abstract}
By ·

It appears the 23-year-old North American Free Trade Agreement (NAFTA) is safe—for now.

Hearing pleas from the business lobby, as well as individual transportation companies such as UPS and FedEx, the Trump administration has backed off threats to unilaterally sever NAFTA.

Trucking executives, transportation officials and shippers have enjoyed 400% growth in cross-border trade since NAFTA was implemented. But in late April, the tri-nation agreement appeared threatened by President Donald J. Trump, who at the time said he was “psyched” to sever the popular pact among the U.S., Canada and Mexico.

As word spread among the business community, Trump backed down. Now administration officials are sending out signals that NAFTA needs to be tweaked, not trashed.

“The first guiding principle is do no harm,” Commerce Secretary Wilbur Ross told a Bipartisan Policy Center forum recently. Verbatim, that is was U.S. Chamber of Commerce President and CEO Thomas Donohue said in May was the Chamber’s goal in lobbying the administration on NAFTA.

David Congdon, vice chairman and CEO of Old Dominion Freight Line, the nation’s third-largest LTL carrier which racked up $290 million as the most profitable LTL carrier last year, had said he was “concerned” the new administration would hamper cross-border trade by needlessly scraping NAFTA.

“Global trade is a reality of life these days,” Congdon told LM.

A majority of voters say trade with other countries helps the U.S. economy. A recent survey showed 70 percent indicated that U.S. trade with other countries is likely to strengthen the U.S. economy, and 64 percent said it creates American jobs. Some 62 percent of all registered voters said the U.S. government should negotiate more trade deals – not fewer.

“American voters support trade because they see its effects in their lives every day. From the goods and services their companies produce to the products they buy at the grocery store, trade supports good American jobs, enhances consumer choice, and drives economic growth,” said U.S. Chamber Executive Vice President and Head of International Affairs Myron Brilliant.

NAFTA appeared threatened earlier this year not only by Trump but by some of the isolationists in his administration, specifically aids Stephen Bannon and Peter Navarro, Trump’s chief trade advisor.

But it appears calmer heads have prevailed. Gary Cohn, the president’s chief economic advisor, and Treasury Secretary Steven Mnuchin both went to bat for NAFTA. In addition, Secretary of State Rex Tillerson and Defense Secretary Jim Mattis also expressed public support for more free trade agreements, not fewer.

They cited that 41 million American jobs depend on trade, and exports support about half of all U.S. manufacturing jobs. Some percent of American companies that export goods are small and medium-size businesses.

“All of our jobs are dependent on global distribution,” says Lynn Cooper, president and CEO of BFW Inc., Louisville, Ky., in a blog posting on the Chamber web site. “Any country we sell to that has a free trade agreement with the U.S. is helpful and allows us to sell competitively in that country.

“Any moves that Washington can make to ease entry the entry of our products into a country and reduce additional costs will be beneficial to increasing sales for our company which means more growth,” Cooper added.

The death of NAFTA would have had major reverberations for many U.S. businesses, especially the fashion industry, retailers and manufacturers, not to mention cross-border transportation providers such as Indianapolis-based Celadon, which earn upwards of 40 percent of its revenue from north-south Mexico and Canada freight.

Servicios de Transportación Jaguar S.A de C.V. is a Celadon-owned carrier based in Mexico. With over 375 trucks in its fleet and growing, Jaguar hauls cross border and domestic Mexico freight. Celadon Canada operates two divisions of Celadon Trucking based in Ontario. Celadon Canada provides seamless transition for crossborder loads. With a fleet of 400, Celadon Canada specializes in inter and intra provincial moves along the east-west Route 401 corridor. Celadon Canada also handles local, regional, dedicated business, as well as crossborder movements.

Julie Gibbs, director of BPE Global, a global trade compliance consulting firm, called NAFTA “the largest free-trade agreement in the world” that has quadrupled the trade among the three countries. Untangling it and getting the U.S. out of it would have been a Brexit-style endeavor that would have involved worldwide complications, she said.


About the Author

John D. Schulz
John D. Schulz has been a transportation journalist for more than 20 years, specializing in the trucking industry. John is on a first-name basis with scores of top-level trucking executives who are able to give shippers their latest insights on the industry on a regular basis.

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