U.S. railroads caught in the middle of new tariff threat

“The rail network and the supply chain is integrated across North America and policymakers should do what they can to promote more trade – not less – across the continent,” the group said.

Meanwhile, Kansas City Southern not only has an operating arm in Mexico, it also serves 90 percent of auto assembly plants in Mexico and has four automotive distribution facilities and access to three major Mexico ports on the Pacific and Gulf Coasts.

Kansas City Southern “is aware of the President’s tweet yesterday but is not able to estimate what impact such action might have on the flow of its cross-border freight. KSU’s cross-border traffic represents approximately 40 percent of our total traffic. Sixty percent of our cross-border traffic originates north of the border and is exported from the U.S. to Mexico, including grain exports originating in the Midwest states forming the US Corn Belt. Forty percent of our cross-border traffic originates in Mexico and terminates in the U.S., including a substantial amount of freight from U.S.-based companies such as the auto sector,” the railroad said.

“KCS hopes that such action will not be necessary and that efforts of the U.S. and Mexican governments to stem the flow of immigrants through Mexico to the U.S. border are not tied to the vital commerce that exists between the two countries and Canada. KCS appreciates and strongly supports the President’s leadership on Congressional passage of the USMCA and believes it will bring needed improvement over the NAFTA agreement and certainty about North American competitiveness going forward,” the railroad further said.

BNSF (NYSE: BRK) and Union Pacific did not return requests for comment, but their role in facilitating cross-border movement is core to their identities. Union Pacific touts itself as the only Class I railroad to serve all six gateways between the U.S. and Mexico.

While U.S. Census data on imports doesn’t break down the imports by transport mode, at stake are potentially billions of dollars. For the first three months of this year, U.S. imports of goods from Mexico totaled $86.6 billion.

Of that, U.S. imports of advanced technology, a category which includes electronics and products for the aerospace and information and communications industries, totaled $13.8 billion in the first quarter of this year. U.S. imports of automotive parts and vehicles from Mexico totaled nearly $32.3 billion.