The head of Union Pacific Railroad said he had cautionary words for President Donald Trump several weeks ago about the country’s trade war with China.
Lance Fritz spoke of his meeting with Trump last week during a Q&A panel at a luncheon to celebrate the 60-year anniversary of the Little Rock Port Authority’s founding at the Robinson Center ballroom. Fritz was joined by Arkansas Gov. Asa Hutchinson on the panel, which was moderated by auto dealer and former White House Chief of Staff Mack McLarty.
Trump has levied 25% tariffs on $250 billion of Chinese goods and threatened more tariffs before a recent meeting with Chinese President Xi Jinping. The trade war has particularly cut into exports for Arkansas agriculture products.
“Our president is taking a very significant, calculated gamble,” Fritz said, using tariffs to get the Chinese to the negotiation table.
During his meeting with Trump, Fritz said the president understood the risk to the economy the trade war was presenting and the concerns of business leaders. Fritz said Trump told him he was making a “judgment call.”
“I said, I hope you’re right because you have to be right,” Fritz said. “You can’t gamble with the U.S. economy.”
The trade war with China was just one of the subjects brought up by McLarty, who served under President Bill Clinton. During Clinton’s first term, the North American Free Trade Agreement between Mexico, Canada and the United States went into effect.
The Trump Administration recently renegotiated an update to NAFTA; the three countries agreed on the United States-Mexico-Canada Agreement in 2018, but the agreement has not been ratified by the U.S. or Canada.
Fritz said the USMCA needs to be ratified because Trump has threatened to abandon NAFTA, which is in effect for the time being. Fritz said having no trade agreement would be a “horrible outcome.”
“The renegotiation of NAFTA was a success,” Fritz said. “The new agreement is a better agreement; it’s modernized. The big lift in front of us is ratification of USMCA.”
Hutchinson said he agreed with Fritz and related how NAFTA had led to Whirlpool leaving Fort Smith, which devastated the city’s economy.
“USMCA is absolutely essential for Arkansas,” Hutchinson said. “Whenever you look at what President Trump has done, he has been very successful in renegotiating a more favorable NAFTA agreement.”
Enjoyed this afternoon’s panel discussion w/ Union Pacific CEO Lance Fritz at the LR Port Authority 60th Anniversary Luncheon. One of the things we discussed was the important relationship between industry & government, when it comes to economic development. Future is bright. pic.twitter.com/CNunH4EMGl— Gov. Asa Hutchinson (@AsaHutchinson) July 8, 2019
Trade agreements and tariffs were relevant topics at the celebration of the Port Authority. The authority was founded July 6, 1959, to oversee operations at the Port of Little Rock, which opened in 1971 as part of the McClellan-Kerr Arkansas River Navigation System, which runs from the Mississippi River to Tulsa; nearly $4 billion worth of goods are shipped on the river annually.
The port’s importance to Little Rock and the state goes deeper than the Arkansas River, though. It is a hub for railroads — hence Fritz’s appearance since Union Pacific is a major player at the port — and major north-south and east-west interstates intersect in Little Rock.
McLarty, whose family has been in the car business for years, joked that the luncheon reminded him of the film “Planes, Trains & Automobiles” but that he should add ships and barges to the title.
“Transportation goes to our way of life,” said McLarty, chairman of McLarty Associates, a consulting firm.
The LRPA Industrial Park has 42 businesses on site that employ more than 4,000. The authority has been buying land in hopes and expectations of expansion.
Hutchinson said the location and logistics of the port and industrial park had helped Arkansas recruit industries to the state.
“We are growing as a state, in population, and we are growing as a state in terms of recruiting industry to Arkansas,” Hutchinson said. “Little Rock in central Arkansas is well positioned. That is why we have had success. The transportation is a critical part of that.”
Fritz said Arkansas is one of 23 states in which Union Pacific does business. He told the crowd he meets regularly with the other 22 governors and warns them not to dismiss Arkansas as a threat because of the “economic engine” of the port.
“I let them know they have a serious competitor in the middle of the country and they better get their act together,” Fritz said. “That gives you a platform from which this city and this state can pursue, in very serious form, additional economic interests.”