Panelists at JAXPORT conference wade through weighty trade and domestic policy issues facing freight world
The last Republican president to take an overtly protectionist stance when it comes to trade was Herbert Hoover, who back the ill-fated Smoot-Hawley Tariff of 1930 believed by many economists to be a major contributing factor to the Great Depression in the 20th century.
Tom Feeney, president and chief executive officer of the Associated Industries of Florida, a business advocacy organization, said he would remind President Donald Trump of this fact if he were to get five minutes to discuss policy with Trump.
Feeney, a former U.S. Representative from Florida, told a panel on Trump’s impact on the shipping industry at the JAXPORT Logistics and Intermodal Conference Tuesday that “no country protected itself to prosperity.”
The panel discussed a wide-ranging list of issues affecting freight and trade, including transportation infrastructure investment plans, the viability of a proposed border adjustment tax, trade agreements, and corporate tax reform.
Darryl Wilson, assistant vice president of government relations for Norfolk Southern Corp. said the Trump administration would be best served focusing on three key areas: business deregulation, tax reform, and infrastructure spending.
On the latter point, both Feeney and another panelist, Kurt Nagle, chief executive officer of the American Association of Port Authorities, agreed.
“I would tell President Trump to make U.S. products more competitive by investing in seaports,” Nagle said. “We need federal help with land and waterside connections, federal navigation channels where necessary, and last mile and first mile connections in and out of ports. There are 23 million jobs tied to cargo, and billions in local, state and federal tax revenues.”
Feeney said he’s transportation spending is the area where he’s most optimistic about bipartisan support.
“There’s isn’t money to pay for it unless you do things creatively,” he said. “Things like user fees, bonds, public-private partnerships. But this is one thing where Sen. Schumer, D-NY, and President Trump can call each other names all night and still have some common ground.”
On the issue of trade policy changes, Wilson lauded Trump for rethinking the way the country conducts trade agreements.
“Trade is not a static thing,” he said. “We’ve got to quit acting like it is.”
Wilson said he was encouraged by Trump’s plans to renegotiate the North American Free Trade Agreement, and to cement more bilateral trade agreements. He suggested one tack might be to engage with the U.K. and Japan on bilateral deals to make the European Union and China take notice.
Starting a trade war is a very bad idea. It will hurt American consumers more than it will benefit American producers.
But Feeney warned of the perils of such an approach.
“I sympathize that some trade agreements need reworking,” he said. “But the indirect beneficiaries of free and rational trade are enormous. Starting a trade war is a very bad idea. It will hurt American consumers more than it will benefit American producers.”
He noted that there is far from unanimity within the White House about whether to take a hard line on trade.
“I think there’s a debate going on within the administration itself,” Feeney said. “Some of the president’s advisors I would call old-fashioned protectionists. From an economic policy, I think it’s long-term bad economics.”
The key is understanding that all trade agreements have “carrots and sticks.”
“That is complex international state policy,” he said. “And so far, this administration has been clumsy in state policy. It’s great to do business with great historic empires like the UK and Japan, but the growth is coming in emerging world. Trade is a way to exert soft power and influence to help civilize underdeveloped parts of the world. You can’t just think of what it means to local workers. It’s a very complex situation in terms of how you balance those things.”
But Wilson said a lot of theory around the benefits of trade have not worked out in practice.
“I think you have to look forward at trade,” he said.“It’s not an anti-China thing, it’s where we are today and where are we going to be in 40 years.”
The panelists also took up the issue of the controversial border adjustment tax (BAT) concept, a mechanism that would change how imported goods are taxed in an effort to offset reduced revenue from potential cuts to corporate and individual tax rates.
Retailers have railed against the BAT idea, saying it would raise the price of consumer goods without affecting an intended change in the make-up of the American economy toward more internal manufacturing. Retailers also say their businesses would be devastated by the tax, which would be assessed on imports at the point of consumption, rather than the point at which it enters U.S. customs territory.
Wilson said the idea made some sense, but Feeney noted that influential Sen. Lindsey Graham, R-SC, said the tax would have more than 10 supporters in the Senate. Nagle said AAPA has taken no official position on a BAT, and said constituent ports might have different viewpoints on the proposal based on whether they are primarily export-oriented or import-oriented.