Railroad stocks tumbled today in response to the Trump administration’s Wednesday announcement of widespread tariffs on U.S. trading partners.
It was an indication that investors believe the tariffs will raise prices and have a negative impact on consumer spending, which in turn will reduce demand for the raw materials and finished products that railroads carry.
At the close of trading on Thursday, the S&P 500 was down 4.8%. The U.S. publicly traded railroads under-performed the broader market: CSX was down 5.8% for the day; Union Pacific declined 6%; and Norfolk Southern slumped 7.4%.
The Canadian railways fared better, perhaps because Canada and Mexico — which were early tariff targets — were exempt from the reciprocal tariffs announced at the White House yesterday.
Canadian National stock declined by 2%, while Canadian Pacific Kansas City was down 2.7%.
“There is a sense of relief that Canada and Mexico were spared from additional tariffs. As the market starts to worry about the impact of tariffs on economic growth, it may also become relevant that, for Canadian investors, CN and CPKC are viewed as two of a limited number of ‘blue chip’ Canadian industrial stocks,” says Cherilyn Radbourne, a Toronto-based analyst for TD Securities.
For the U.S. railroads, the reciprocal tariffs on China, the European Union, Japan, and other Asian nations were higher than anticipated.
“Ultimately, Trump’s tariff announcements were less onerous than feared for North American trade partners Canada and Mexico and worse than feared for China and other U.S. trade partners in Asia,” says Bascome Majors, an analyst at Susquehanna Financial Group. “This dynamic is playing out today in rail stocks with Canadian rails CP and CN outperforming and in broader transportation stocks with international trade levered businesses like Expeditors, FedEx, and UPS underperforming.”
Given the often fluid nature of President Donald Trump’s tariff plans this year, independent rail analyst Anthony B. Hatch wondered how the situation might change in the coming weeks and months.
“It appears that Canada and Mexico were spared,” Hatch says. “But spared for how long?”
The USMCA trade deal that was signed during the first Trump administration comes up for renegotiation next year, Hatch notes. And the 25% tariffs imposed on imports of steel and aluminum from Canada and Mexico remain in force.
Yet Hatch says that the steep reciprocal tariffs on imports from other countries — like the 24% levy on Japanese products — may help make Canadian and Mexican products more competitive in the U.S.
Stellantis, however, announced today that due to tariffs it would temporarily suspend production of Chrysler minivans at its assembly plant in Windsor, Ontario, and the Jeep Compass at its plant in Toluca, Mexico. It also was laying off employees at plants that make parts for the minivans and Jeep SUV.
Hatch contends that more than half of rail traffic is trade-related in one way or another. It won’t be clear what the tariff impact on rail traffic might be until railroad shippers have time to analyze how tariffs might affect their businesses, Hatch says.
Under the plans outlined yesterday, the U.S. will impose a 10% tariff on all imports and significantly higher rates for some nations that are deemed bad trade actors. Trump called the plan “Liberation Day” and said the tariffs would reduce trade imbalances and promote U.S. manufacturing.
“Jobs and factories will come roaring back into our country, and you see it happening already,” Trump said. Companies seeking to avoid tariffs, he adds, should build their products in the U.S.
Note: This story was updated at 3:25 p.m. Central with closing stock market prices.
The world was at war with the US through trade and we did not recognize this. Now when the US has counterbattery fire, the US is the evil party? And Mike, during the Obama recession, I lost 50% of my retirement savings. It returned to previous levels in 2019. You have 6 years to regain your losses. Do not panic and make rash decisions. Keep doing what you have been doing the right actions and you will, as all of us will, survive and thrive. Cheeers
The only thing I can say about Trump and his tariffs is to quote that great political philosopher Marx (as in Groucho), “whatever it is, I’m against it!”
Sounds like something a Democrat would say…
The largest tax increase in history. By Trump who is so stupid he doesn’t even understand how tariffs work or who pays them.
The entire world economy is going to be destroyed by this. ALL OF YOU who voted for Trump owe the rest of us an apology. He TOLD YOU he was going to do this and you said “sure, what could POSSIBLY go wrong?”
I just turned 60. I’m going to need my 401k soon, and it’s in the process of being destroyed. A man who bankrupted more than one casino should’ve been laughed out of the Republican primary in 2016, but here we are 8 years later. We’re all screwed.
Thanks, ya’ll.
I never voted for Trump in a Republican primary. I voted for Ted Cruz in 2016, and Ron DeSantis in 2024, in the primaries.
Now Mike perhaps you could explain the utter depravity of the three Democrats Trump ran against. It’s hard to be worse than Trump. But Hillary, Joe and Kamala all succeeded at that difficult task.
A dead cat could have beaten Trump last November. Kamala did not.
A dead cat Charles? Half the country would disagree with you…
Ah, you Never Trumpers never fail to disappoint. You understand the reciprocal nature of tariffs as well as you understand the simple fact that at least half the country is no longer willing to go along with business as usual as seen in the failures of the past 35 years. In other words, not at all. Every country in the world now has the opportunity to reduce their tariffs on our goods to a level equal with ours. All they have to do is take that opportunity and all your scary scenarios will never occur. If not, well, bye.
If you think other countries are entitled to charge a 200% tariff on our goods while we charge 10% on theirs, then, as the saying goes “I got nuttin’ for ya”.
Well Lawrence you obviously have absolutely no idea how the world economy works. I’m guessing no economics classes in school. But just like all king trump lovers until it gets deep into your pocket you’ll keep right on parroting whatever comes out of his lunatic mouth. But I’ll guarantee you’ll wish you’d never voted that orange a##hole in the NEAR future. But like all trumpers you’ll never admit it. But you’ and others who have voted for and supported a treasonous felon to be king will live with it on your conscience if you have one.
Well I know how the world economy works having been involved in it for 37 years, A reset of the world trade economy had to happen. The US was not growing economically, even less after four years of who know what it was, it wasn’t commerce… Anyone who thinks that our “Allies’ and trading partners taking our jobs and manufacturing and then charging us for the privilege has a warped sense of what it means to be a patriot and citizen of this great land.
Wall Street has reacted the way it has because Wall Street doesn’t give a crap about Main Street. And now that their “Cheese” is being moved they act like life is at an end… Like others, I lost a lot of money in 1987, also in 2008, but I stayed the course and made it all back and then some during the Presidents last term. The long term is always the best financial resolve, unless you are only interested in making quick profits at the expense of others. Companies like Ancora Holdings and other Hedge fund managers (Why do you think they use the term “Hedge” to describe themselves) who don’t care about anyone else but themselves. DO what you want and believe what you want to believe but I believe in America and will continue to make the smart play. Hope each of you gets what you deserve as well…
Okay, it makes sense that international intermodal container volumes will be affected, but what if manufacturing and industry comes back strong? What will be the rail needs of new domestic automobile plants and steel plants and other manufacturing? Railroads definitely will benefit from the increase in coal shipments that are planned. Will domestic lumber production come back in Maine and the Northwest?
We may see a resurgence in long lost rail service that we haven’t seen in years. This could get interesting. Time will tell.
Mr. Andre, things are definitely going to get interesting. But time my friend has already told!
There will be a resurgence no matter what doomsday Dems say, and they are going to get interesting, you are right about that Chris. But not in the way you seem to be hoping…
Winning Yet??
No good will come of this an I expect model railroad prices will go up.
Model railroad prices will go up? That’s the least of your worries! That crash you hear is NOT a train wreck….its mango man wrecking the worlds economies.
DANIEL — He’s a lunatic but no longer mango man. He has stopped dyeing his hair orange.
What Trump calls “Liberation Day” I call the opening act to a worldwide depression.
Well Charles YOU VOTED FOR THIS! And don’t say you didn’t know what he was going to do. And if you think things are going to crap now. JUST WAIT!!!
No Chris, I didn’t vote for the invasion of Denmark, a NATO ally. Trump came up with that after the election, not before.
Wrong again Charles. The Nut king said he would take Greenland even if it took military action. Anybody with a brain knew what he meant as far as Denmark was concerned. But really Charles is that the worst the man has promised to do. You just stay tuned for the worst is yet to come. Do a little more research before you pull that lever next time.