Tariffs on Mexico could cripple some railroad companies

Written by Bill Wilson, Editor-in-Chief
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President Trump’s threat to hit Mexico with a 5 percent tariff has railroad companies worried.

Kansas City Southern is keeping a close eye on what happens with Mexico regarding tariffs. 

The railroad company has an operating line in Mexico and serves 90 percent of the auto assembly plants in the southern country. It also has four automotive distribution facilities and access to three major Mexico ports on the Pacific and Gulf of Mexico coasts. 

The Trump administration is looking to apply a 5 percent tariff on Mexican imports beginning June 10 as a way to apply pressure on the illegal immigration problem on the border. President Trump wants Mexico to stop the movement of those crossing over in the U.S. Kansas City Southern is not the only railroad company stressed over the situation.

The Association of American Railroads wants Congress to ratify the United States-Mexico-Canada Agreement (USMCA), which is the trade agreement between the U.S., Canada and Mexico. The association said Washington should do what it can to promote more trade across the continent instead of tampering with it. 

According to Kansas City Southern, cross-border traffic represents about 40 percent of its total traffic, and 60 percent of cross-border traffic starts in the U.S. and goes to Mexico, while 40 percent originates in Mexico and moves to the U.S.

The Association of American Railroads and its members are continuing to monitor the tariff situation.

Categories: Class 1, Freight
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