Lance Fritz at the press club

Union Pacific CEO Lance Fritz speaking Thursday at the National Press Club.

WASHINGTON — From the threat of NAFTA withdrawal to the ongoing tariff battles, trade disruptions are threatening to undermine an otherwise robust economy, the head of Union Pacific said Thursday.

“The decisions made here in Washington about trade affect my hometown of Omaha, Nebraska, and all of our citizens,” Lance Fritz said at the National Press Club. “It affects the 7,300 communities that Union Pacific serves.”

The chairman, president and CEO of the Omaha-based freight rail behemoth has been publicly and pointedly making the case this year for free trade, which is fundamental to the company’s bottom line.

About 40 percent of Union Pacific traffic originates or ends outside the United States. And the railroad handles 70 percent of the business going in and out of Mexico.

Pulling out of the North American Free Trade Agreement would “be disastrous” and jeopardize millions of jobs tied to trade with Mexico and Canada, Fritz said.

He spoke vividly about trade’s positive impact on American workers, from Ohio factory employees making auto parts to Iowa soybean farmers.

“Those soybeans are shipped by us down to Mexico,” Fritz said. “They get crushed into oil and meal. And the oil comes back across the border as vegetable oil sold in our grocery stores.”

Fritz cited the case of a Union Pacific customer who has had a load of steel sitting for weeks on a boat outside the port of Long Beach over a dispute about who will pay the 25 percent tariff.

President Donald Trump has sought to reassure Americans about his trade moves, insisting that they will be better off in the end.

He tweeted Wednesday from the NATO summit in Brussels that he’s “always thinking about our farmers” and that soybean prices were declining even before his election.

“I will open things up, better than ever before, but it can’t go too quickly,” he wrote. “I am fighting for a level playing field for our farmers, and will win!”

Fritz said he applauds the administration for its attempt to level the trade playing field and said China’s bad practices have to be addressed.

But the best way to confront China, he said, is as a united front with allies, and is achieved by modernizing trade agreements and working together rather than tariffs and trade wars.

“If the United States of America doesn’t write the rules of global trade, I’m sure China would be more than happy to write them for us,” Fritz said.

The railroad serves more than 10,000 customers operating in 23 states over 32,000 miles of track. It employs 42,000, including 8,300 in Nebraska (more than half of those in the Omaha area).

It’s an economic bellwether, Fritz noted, with overall trends showing up in their carloads before they’re reflected in official statistics. From his perspective, he said, it’s clear that the economy is going strong.

An easing of government regulations and a corporate tax overhaul have spurred companies to make capital investments, he said, and consumer confidence is up.

Union Pacific itself has used excess cash to increase its capital investment by more than $150 million, he said, in addition to rewarding shareholders with dividends and stock buybacks.

But trade disruptions threaten to upend positive economic trends.

Cratering soybean prices are making it tough for farmers to turn a profit while lumber tariffs are driving up the cost of housing, Fritz said.

He cited studies indicating that manufacturing job losses are due more to automation than trade and talked about the need for a climate in which businesses have the confidence to invest.

“But the recent trade policies have done the opposite by creating uncertainty that’s going to cause capital investment to slow down,” he said.

Union Pacific has seen a direct impact from the trade situation. It imports long sections of steel track from Japan. The company has sought a tariff waiver for those imports but is still awaiting a decision from the Commerce Department.

The first shipment of rails from Japan post-tariffs came in May and that boat sat in the San Francisco harbor for weeks because of a dispute over who would pay the tariff.

The tariff involved with that one boat amounted to $6 million — and there are up to half-dozen such shipments a year.

“That’s real money,” Fritz told The World-Herald in an interview before his speech.

Nebraska and Iowa lawmakers are largely on the same page with Fritz when it comes to trade, but their objections to the administration’s policies thus far have come via speeches, letters and this week’s support for a nonbinding Senate resolution.

Asked whether Congress is acting aggressively enough, Fritz praised the resolution and said its overwhelming passage sends a message to the president.

“I do see Congress thinking about what their role could be, should be and taking action on it,” Fritz said. “I’d always like to see more.”

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Reporter - Politics/Washington D.C.

Joseph Morton is The World-Herald Washington Bureau Chief. Morton joined The World-Herald in 1999 and has been reporting from Washington for the newspaper since 2006. Follow him on Twitter @MortonOWH.

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