Transport Leaders Begin Meeting With Trump Transition Team as New Era Commences

Now what?

Donald J. Trump’s stunning game-changing upset to become President-elect of the United States, has left transport leaders scratching their heads and wondering what, precisely, will a Trump presidency look like.

Basically, it’s a Rorschach Test. You can see anything in the prospective 45th president that you want to see.

“During the campaign, he highlighted the need to create jobs, and recognized that improving our nation's infrastructure is critical to strengthening the economy,” American Trucking Associations said after Trump won.

“As the industry that moves nearly 70% of our nation's freight and is a key economic driver, we look forward to working with President-elect Trump on a host of issues, including long-term, sustainable infrastructure funding, tax reform and fair and free trade.” 

ATA officials said they had already begun meeting with the Trump transition team.

They said they look forward to “working closely” with the new Administration on issues that will allow the trucking industry to continue to grow and move America forward in the 78 days before Inauguration Day.

The Trump transition team is led by New Jersey Gov. Chris Christie, who in his eight years as governor was reluctant to raise taxes of any kind. And this summer the Garden State suffered a transportation crisis, as hundreds of construction projects were halted because the state highway trust fund was bankrupt.

As a result, in October, state legislators approved an immediate 23-cent per gallon increase in the gasoline tax. For truckers, it will be mean a 27-cent per gallon increase on diesel, effective Jan. 1.

The Garden State immediately went from having the second-lowest state fuel tax (14.5 cents for gasoline) to the seventh-highest (37.5 cents for gasoline, 44.5 cents for diesel).

Whether such a hike in the federal fuel tax (18.4 cents for gasoline, 24.4 cents for diesel, unchanged since 1993) is coming in a Trump administration is anyone’s guess.

But it is clear after a lukewarm relationship with Trump during the campaign, establishment business groups are already flocking to the Trump side post-election.

“President-elect Trump has embraced rebuilding America’s infrastructure, fundamentally reforming the anti-growth U.S. tax structure and bringing common sense to federal regulation,” said John Engler, president of the Business Roundtable, a group that claims its member companies have $6 trillion in annual revenues and employ 15 million employees.

“These are key pro-growth policies, critical to new innovation and investment. America’s business leaders fully support these priorities,” Engler added.

During the campaign Trump talked, vaguely, of spending $1 trillion to rebuild the nation’s sagging infrastructure. “Rebuild the country's infrastructure; nobody can do that like me, believe me. We have to rebuild our infrastructure: our bridges, our roadways, our airports,” he said this summer.

We could use the facelift. The American Society of Civil Engineers (ASCE) gave the United States a “D” grade on infrastructure, adding that there will be a $1.44 trillion infrastructure funding gap over the next decade.

According to the ASCE, this will affect exports and productivity and will cost the average American family $3,400 annually. “Poor road conditions are blamed for increasing congestion as well as a factor in about one-third of all highway fatalities, so investing in infrastructure will make Americans safer,” the ASCE said recently.

On the campaign Trump never talked specifics. But he has called for a “trillion-dollar rebuilding plan,” which would be “one of the biggest projects this country has ever undertaken.”

Trump also suggests that it would create 13 million jobs - a figure that originates in the Senate Budget Committee’s estimate of how many workers it would take to fully modernize the nation’s infrastructure.

The 3 million-member U.S. Chamber of Commerce said it welcomed Trump to Washington, and has called for much greater spending on infrastructure. But first some healing has to occur, it said.

“Americans have just lived through a bitter, personality-driven campaign that exposed some deep divisions in our country,” U.S. Chamber President and CEO Thomas J. Donohue said in a statement. “Now, it’s time to turn the page and refocus the country’s attention on the many substantive domestic and international challenges facing us.”

Lindsay Newman, principal analyst at IHS Country Risk, said in a note that Trump winning the White House and Republicans retaining control in both houses of Congress may embolden President Barack Obama to pursue additional executive actions around the environment, immigration, and relations with Cuba during his lame duck term.

Once in office, Newman said the 100-day action plan Trump has laid out provides “a strong indication” that he will look to undo many of Obama's legacy domestic policies.

This could include a series of rollbacks on President Obama's policies on immigration, gun control, Cuban-American relations, and repealing the Affordable Care Act, Newman said.

With the additional benefit of a Republican majority in both houses of Congress, Trump will also prioritize his flagship tax reform initiatives including reducing the number of tax brackets from seven to three and cutting corporate tax rates across the board from 35% to 15%, Newman added.

In foreign policy, Trump has said he would rewrite the 24-year-old North American Free Trade Agreement (NAFTA), withdraw from the Trans-Pacific Partnership (TPP), and label China a currency manipulator.

This suggests that increased use of World Trade Organization dispute settlement mechanisms, especially those pursuing Chinese industry, are likely in the next two years.

Edward R. Hamberger, president and CEO of the Association of American Railroads (AAR), said domestic policy making is the No. 1 priority for his group.

“American industry, including the freight rail sector, is eager to work with a new administration and Congress, helping advance policies that will spur economic growth, support quality jobs and further cement the United States as a global leader,” Hamberger said in a statement.

Hamberger said that as a business leader, Trump understands many of the economic challenges facing this country.

“As such, we hope he will move quickly on issues such as comprehensive tax reform that reduces the corporate rate, a review and reform of the broken regulatory system and an embracement of fair and open trade,” Hamberger said.

“These policies, as well as the steady presence of America’s privately owned freight rail network, are critical to enacting much of Mr. Trump’s agenda, including public infrastructure investment.”

Michael Baudendistel, vice president at Stifel Inc, said Trump and a Republican-controlled Congress without an anti-coal agenda “may slow the impetus to put greater restrictions on the coal industry and we believe the same can be said for fracking.”

There is current excess capacity in coal railcars and small-cube covered hoppers (used to haul sand for fracking), Baudendistel said he does not expect to see a rebound in the near-term for those car types.

“There is also likely to be less resistance to building pipelines which is a positive for metals on the railroad, but makes it unlikely that crude-by-rail will return to levels seen a few years ago,” he added.

Baudendistel said in the long run there may be risk given the protectionist rhetoric Trump used regarding manufacturing moving to Mexico. “We believe it is unlikely (or impossible) for manufacturing already established in Mexico to be effectively forced to shift back to the U.S., but it is certainly possible additional taxes could be levied which would reduce the financial benefit of those operations,” he said in a note to investors.

Phillips Nizer’s Alan Behr, an attorney who writes the popular Fashion Industry Law Blog, predicted trade policy is about to get a major shake-up.

“No one is quite sure what Mr. Trump will seek to do and the extent to which he will have cooperation from legislators on either side of the aisle,” Behr said. “All we can predict with reasonable certainty is that TPP is dead letter.”

Behr noted that Trump may try some different approaches that could benefit the textile industry.

“Anyone with a good plan to restart American textile and clothing production (which is not dead, but certainly not what it once was) may get heard in a way that would not have been possible under the ‘globalization first’ perspective of the Democrats,” Behr said.

“Retail will continue to move into omnichannel forms of distribution, and that will likely occur independently of any political action, at least for the near time.”

But the problems the USA has been experiencing concerning jobs and middle-class incomes have not been due to stagnant sales to consumers - Americans are still buying - but in the production of goods, he said.

“What Americans have been buying has largely been made elsewhere,” he said. “Baristas just can’t earn what machinists are paid, and it is the machinists who have been losing their jobs.”

Stifel Chief Economist at Stifel Fixed Income, Lindsey Piegza, said Trump now faces “a heightened expectation of change and progress against the backdrop of stagnant economic activity, waning income growth and a growing divergence among 'class lines.'”

Whether that is good or bad for transports is like nearly everything else about a prospective Trump administration - it’s anyone’s guess right now.

As Steve Schmidt, the veteran Republican campaign strategist and advisor to Sen. John McCain’s 2008 presidential campaign, said on election night: “We really don’t know what a Trump policy presidency will look like. The policy proposals offered during the campaign were pretty incoherent.”

Related Article: Global Trade Reacts To Donald Trump’s Stunning Win