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FedEx CEO Warns Trump Attack on Trade Could Be 'Catastrophic'

December 13, 2016, by Deborah Lockridge - Also by this author

Smith
Smith

FedEx Chairman and CEO Fred Smith warned that President-elect Trump's campaign promises to pull back on international trade agreements could be “catastrophic.”

Smith told the audience at the National Council on Competitiveness Forum, “Trade has made America great, and expanding trade has been a bipartisan pursuit for over 80 years. The failure to continue to do so would be a severe mistake with enormous consequences for America and the world.”

He noted that while the U.S. is facing many major economic challenges, including slow economic growth, national debt, low federal and business investment, deteriorating infrastructure, increasing protectionism here and abroad, and too many citizens feeling that they’re being left behind, these problems should not be blamed on trade.

In addressing the Trans-Pacific Partnership agreement (TPP) negotiated among the U.S. and 11 other countries, Smith said, “We urge the Trump administration to put its stamp on a revised TPP by addressing any concerns it sees, and making any additional improvements to promote trade, rather than restrict it.”

As for the benefits of U.S. trade with Mexico and Canada, Smith advised that while the North American Free Trade Agreement agreement could be updated and strengthened, withdrawal from the agreement “would have massive economic repercussions.” He added, “There are myriad reasons why that would be catastrophic for the U.S. economy” due to the supply chains throughout the region.

NAFTA trade more than quadrupled in 20 years, which boosted the economies of all three countries. Nearly 14 million jobs depend on trade with Canada and Mexico, he said.

“Few people understand how NAFTA has woven the productive capacity of North America into one integrated platform,” he explained. “The United States, Canada and Mexico make so many things together…. The auto industry is a great example. A November 10 Wall Street Journal article cited an example in which a seat had parts from four U.S. states and four Mexican locations.”

Among other examples of times when protectionism has not worked, Smith noted, “We have the best example of protectionism from our own history. The devastating Smoot-Hawley Act of 1930 raised tariffs on more than 20,000 items. This contributed to a 66% decline in world trade from 1929 to 1934. This misguided act of Congress ignited the Great Depression.”

Smith emphasized that “trade is a two-way street, in which both imports and exports are vital.” He said American farmers, manufacturers and other companies — and the jobs they support — depend on foreign markets. “Overall, trade supports over 40 million U.S. jobs, or more than one of every five in our nation. Tens of thousands of those jobs are at FedEx.”

Smith noted that the U.S. currently has free trade agreements in place with only 20 trading partners. “Contrary to public perception, the U.S. enjoys a surplus with those trading partners in manufacturing, and has global surpluses in services and agriculture.” In fact, he said, these 20 free trade partners buy nearly half of all U.S. exports. “The U.S. wins when we enter free trade agreements.”

Full text of the speech is available here.

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  1. 1. JJ [ December 13, 2016 @ 06:45PM ]

    A hundred years before Smoot-Hayley we passed a tariff that was larger than Smoot-Hanley and it caused an economic boom. That was the Tariff of 1828. From the end of the War of 1812 until the Kennedy Round of tariff reductions in 1967 the United States was the most tariff protected nation on earth. In the real world tariffs have been better for the American people than free trade. The Ivory Tower theory of free trade is antithetical to the real world experience of this country.

  2. 2. Joseph [ December 14, 2016 @ 04:47AM ]

    The 1828 Tariff was one of the causes of the Civil War. Great idea.

    http://www.emarotta.com/protective-tariffs-the-primary-cause-of-the-civil-war/

  3. 3. CT [ December 14, 2016 @ 05:12AM ]

    The 1828 Tariff was blamed for the crunch on cotton with European nations when it really had everything to do with slavery and the slave labor of the cotton empire. As usual, this was simply another issue for the global elite of that day.
    Smith is worried about his own airy diary. He'll still have the same volume of packages moving about, but there is one difference he knows will come to pass. Package volume domestically can't match his $ for $ in package volume moving about internationally.
    This is simply another global elitist covering his own rear. He's into "Smith first" instead of "America first"...
    This same guy LOVED NAFTA and was salivating over TPP...that should say it all.

  4. 4. JJ501 [ December 16, 2016 @ 05:50AM ]

    Blaming free trade agreements of everything that happens to you is not intelligent(Ignorance at its best)

  5. 5. Anthony [ December 16, 2016 @ 07:02AM ]

    Seriously??!! Like the current trade deals haven't been catastrophic for the nation already??? trump can't do any worse!!

  6. 6. Bigdaddy001 [ December 16, 2016 @ 10:38AM ]

    Slow economic growth, national debt, low federal and business investment, deteriorating infrastructure, increasing protectionism here and abroad, and too many citizens feeling that they’re being left behind.
    All the things Trump wants to fix. Did he ever listen to him?

  7. 7. Reuben [ December 17, 2016 @ 06:58PM ]

    No listening, just covering his own money game. NAFTA was really bad for our area, really depressed it putting many local employment factories out of business. Sure they were low wage jobs, but they were jobs in an area that has very limited local work opportunities. Different countries have different economies and to equalize trade is an attempt at equalizing economies, but it doesn't work very well, in reality it just makes the rich richer and the poor poorer. Benefiting business owners, (reducing manufacturing expense while they keep their prices steady) and taking jobs away from some areas putting them into other places where the economy is lower, wages cheaper, and people live in worse poverty. Not helping them much by doing so.

  8. 8. claude [ December 18, 2016 @ 05:56AM ]

    mr. smith , if the present free trade is so great , then why is mexico and Canada already agreed to reworking it with America so it is balanced for both sides

  9. 9. Daniel Ray Waters Hazelto [ December 29, 2016 @ 07:50PM ]

    Free trade is not what destroyed our economy. It was a monetary system based on debt that gutted the production primarily. The most massive economic depression known to man is on it's way and it's not Trumps fault. Though he will serve as a great catalyst to the reckoning. It is needed to jolt people out of there delusion during the 6th mass extinction.

 

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