Fears at the Border
In Clinton County, New York, a decision 25 years ago to tie its future to its proximity to Montreal paid off. About 15 percent of its population of 80,000 works for a Canadian or border-related employer, according to Garry Douglas, CEO of the North Country Chamber of Commerce in Plattsburgh. Direct annual economic impact from cross-border commerce amounts to more than $2 billion a year. Tariffs threaten that.“Most are hopeful this is all tactical and will eventually be resolved,” Douglas said. “The uncertainty, however, is already having a chilling effect on decisions by companies regarding cross-border investment and deals.”Similar fears loom in Florida, bound to Latin America and the Panama Canal with 14 deep-water seaports. The Florida Chamber of Commerce estimates that a quarter of the state's economy depends on trade to some extent.But in Granite City, Illinois, the sound of blast furnaces roaring back to life is the area's hope. U.S. Steel Corp. plans to hire about 300 people to restart a second furnace at its plant there to satisfy fresh demand for American-made steel, the company said this month. It resumed operations in March after Trump announced the tariffs based on national-security grounds.The town of about 30,000, just across the Mississippi River from St. Louis, was founded around the steel industry, said James Amos, its economic development director. More workers at U.S. Steel mean more people buying gas or grabbing lunch. “It really does put a real smile on people's faces,” Amos said.Elsewhere in America's industrial heartland, though, companies are on edge. Many have built supply chains that source parts from all over the world.“Uncertainty in terms of trade and global flows like that isn't good,” said Blake Moret, chairman and chief executive of Rockwell Automation Inc., a Milwaukee producer of industrial systems.Some companies are delaying capital projects. Tariffs are clouding investment decisions and raising construction costs, said A.B. Ghosh, North America president of Akzo Nobel NV's specialty chemical business. While the Dutch company will proceed with a $100 million upgrade of an Illinois plant, “it may stop us from doing other investments,” Ghosh said.
Transportation of Goods at Risk
Companies with links to Mexico are particularly worried. Mexico has been hit with steel tariffs, and Trump has threatened to pull out of the North American Free Trade Agreement (NAFTA).Union Pacific Corp. has connections at six border crossings, and 12 percent of its volume originates or ends in Mexico. The Omaha, Nebraska-based railroad also owns a 26 percent stake in the Mexican railroad Ferromex.“The worst fear would be the trade war in general,” said Rob Knight, CFO of Union Pacific. “Does Mexico come up with some other retaliatory action?”Growers of apples, pears, and cherries in Washington, Oregon, and Idaho are rushing to figure out what they can do with perishable fruit that's now the target of retaliatory tariffs in markets such as China, India, and Mexico. Mark Powers, president of the Northwest Horticultural Council, said its 4,700 growers in those states export about $1 billion worth of produce each year. Finding new, tariff-free markets requires lengthy negotiations between countries."Quantifying the results of this is a guessing game," he said. "We're already seeing customers coming back and asking for discounts and offsets."Cherries are a pressing concern, particularly because members are enjoying a bountiful crop. The fruit lasts only about seven days once picked, and most exports are shipped in planes to Asia."If China closes, that's our largest cherry market, and it's hard to divert on the fly," Powers said.
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