Ports, trade and jobs

In Steven Solomon’s book “Water: the Epic Struggle for Power, Wealth and Civilization” he notes two of the greatest water decisions that helped make America a global power are the building of the Erie Canal and Panama Canal. Both gave the US the ability to conduct trade more easily. I mention these decisions as many east coast US ports have dug deeper channels to permit larger ships to enter their harbors. And, non-port cities have developed trans-modal distribution facilities to get goods on and off planes, trains and trucks often going to or from ports.

The leaders of ports and these trans-modal facilities have concerns over the tariff wars that are beginning because of the short-sighted decision of the US President. While some industries will see job increases, peripheral and other industries will see job losses. But, the ones who see red flags are those who handle the distribution of goods.

The port leaders are concerned the return on the investment to dig deeper ports may be watered down. But, less trade also means fewer truck drivers, rail workers, dock workers and distribution handlers. This is on top of industries specifically hit by tariffs.

Nick Hanauer, a venture capitalist spoke on a Ted Talk about his frustration that business leaders called themselves job creators. He asked “Do you know who creates jobs? Customers.” It should be noted the first and third Presidents who witnessed the most jobs were Bill Clinton (22.9 million) and Ronald Reagan (16.1 million). Per David Smick, an economist who worked for both, this was in large part due to their emphasis on free trade.

Tariffs hurt the wrong people. They may help some targeted industries, but they end up hurting far more employees than they help.They do hurt business owners, but in the end, they reduce the number of customers. And, fewer customers cause fewer jobs. The math is that simple. Any decision that adds to customers is job accretive, while the converse is also true. And, one thing is certain – we cannot shrink our customer base to greatness.

12 thoughts on “Ports, trade and jobs

    • Janis, you hit the nail on the head. CFOs of companies prefer predictable costs as much as lower costs. This is one reason they cried out for change which introduced Obamacare. And, now politics are getting in the way of fixing that and actually made it worse. Keith

  1. Dear Keith,

    I get the president’s decision to target China as it has been a bad actor but there is no good reason to go after our neighbors Canada and Mexico. There is not one UNION, steel or aluminum corp that is in favor of steel/ aluminum tariffs on Canada.There is no logic to this. This has been fact checked that the US has a trade surplus with Canada even though the president has said otherwise.

    You are absolutely right. The US is a consumer driven economy. To grow the US economy, we need to increase demand on US goods which can be done in part by getting more monies into the hands of middle class/ poor who will spend it on buying more goods.

    Hugs, Gronda

    • Gronda, and yet as noted even by some Fox experts, Trump was outmaneuvered by China, who has patience for a long game. Tariffs on allies is asinine. We have harmed our relationships. Since Trump is a salesman not a service provider, he does not know you make more money long term by valuing relationships. Keith

  2. Note to Readers: Watching Mark Shields and David Brooks recap the week on PBS Newshour last night, they used words like “ruinous” and “reckless” to define Trump’s tariffs on allies. Shields went as far to note that Trump does not count many friends and treats everyone as “enemies.” That is a profound assertion.

    • Roger, interesting you say that. Wilbur Ross has made his fortune on buying distressed companies such as textile and steel companies. He had a vested interest in steel tariffs. Plus, Trump has the wealthiest cabinet in history. So, too bad for the common man. Keith

      • Norman Lamont MP and minister in Thatcher’s government (and not short of cash) made this heartless and unforgiveable statement On 16 May 1991, Lamont stated in parliament that “Rising unemployment and the recession have been the price that we have had to pay to get inflation down. That price is well worth paying.”…needless to say he was not having his home repossessed or seeing his family go hungry or poorly clothed; he had to pay nothing (aside from his reputation in some quarters) and is still around, naturally as one of the Brexit champions.
        As unethical as calling for war while ensuring your children do not get drafted.

      • The Thatcher era did split the UK and it is arguable whether that was ever truly healed. It certainly made the ‘North/South’ divide more pronounced. Blair might have resolved the issue but he became too messianic without really explaining just what he was messianic about.

      • Roger, the one thing I remember most is Reagan loved her, which means she was very conservative like him. As for Blair, that is an interesting description. Keith

  3. Note to Readers: The one thing that a narcissist cannot stand is criticism. What will be interesting to see how he reacts to many other countries pushing back on his tariffs. He often decries croticism as fake news, but it will be hard to hide from this. A reporter said today, the responsive tariffs will be felt rather immediately by American business and farmers.

    CFOs have been dealing with the tariff chaos for a few months. They want predictability and consistency, so some companies had to seek alternative customs and suppliers. As I mentioned in an earlier post, Trump is forcing other countries and all global businesses to consider options. Trump should recognize that these options may not include US companies. Keith

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