Rail Consolidation is a Tax on Americans

The eyes of the world are currently fixed on the Strait of Hormuz. With Iran closing this vital shipping lane, global energy markets are in a tailspin. Here at home, the consequences are visible on every street corner: the average price of regular gas has climbed to $4.03, a staggering jump from $3.17 just one year ago.

While the Trump administration works to project strength abroad and reopen the strait, a different kind of economic sabotage is brewing domestically. It isn’t happening in a war zone, but on the 140,000 miles of track that make up the American freight rail network.

The proposed merger between Union Pacific and Norfolk Southern is more than just a corporate deal; it could be a direct threat to the President’s affordability agenda. If this consolidation is allowed to proceed, it will create a private-sector monopoly that acts as a permanent “inflation tax” on every good moved in America.

The $250 Billion Chokehold

Freight rail is the unsung hero of the American economy. It moves nearly 40 percent of all long-distance freight in the United States. Unlike the subsidized, state-run rail systems of Europe or Asia, America’s system is a marvel of private-sector efficiency that remains directly competitive with the trucking industry.

However, that efficiency depends entirely on competition. The Union Pacific-Norfolk Southern merger would create a behemoth worth more than $250 billion, controlling over 50,000 miles of track.

In many regions, this would effectively eliminate “intermodal” competition, giving a single boardroom the power to influence the cost of living for millions. When shipping rates rise due to a lack of options, those costs aren’t absorbed by the railroads. Rather they are baked into the price of your groceries, your car, and your utilities.

Derailing the American Dream

Nowhere is this threat more acute than in the housing market. We are already facing a historic supply shortage that has sent home prices skyrocketing. Economists point to construction costs as a primary driver, and those costs are linked to rail.

Consider the data: A single rail car can carry enough framing lumber to build 5.5 homes. Beyond wood, rail is the primary transport for cement, steel, and insulation. If a merged rail giant decides to increase its freight rates by even a small percentage, the “multiplier effect” on a new home’s price tag can be thousands of dollars.

At a time when the National Association of Home Builders (NAHB) reports that over 60% of households cannot afford a median-priced home, we cannot allow a rail monopoly to push the American Dream further out of reach.

Threatening the “Made in the USA” Renaissance

The Trump administration has made “onshoring” manufacturing a cornerstone of its economic policy. But manufacturing is, by its very nature, a rail-dependent industry. You cannot move the massive quantities of “Made in the USA” steel, heavy machinery, and chemicals required for a modern industrial base solely on the back of semi-trucks.

Currently, one-third of all U.S. exports move by rail at some point in their journey. Shipping costs are a decisive factor when a global company evaluates whether to build a factory in Ohio or overseas.

If we hand the “keys to the kingdom” to a single dominant rail carrier, we are effectively giving that carrier a veto over American industrial competitiveness. High shipping dividends for Wall Street should not come at the expense of blue-collar jobs in the Heartland.

The Energy and Coal Lifeline

Finally, we must address the energy sector. Rail is the primary artery for moving American coal, refined fuels, and petrochemicals. In fact, three-quarters of all American coal is delivered via rail.

This is a vital lifeline for energy markets and the struggling communities of Appalachia.

In a competitive market, rail carriers must keep rates disciplined to keep coal competitive with other energy sources. In a monopolized market, that discipline vanishes. The resulting spike in utility bills would hit the most vulnerable Americans the hardest, the very people the Trump administration has vowed to protect.

A Mandate for the Surface Transportation Board

The fate of this merger currently rests with the Surface Transportation Board (STB). By law, STB must review Class I railroad mergers based on their “competitive effects” and whether they “serve the public interest.”

On both counts, the Union Pacific-Norfolk Southern deal fails. There is no public interest served by reduced competition, higher gas prices, and more expensive housing.

President Trump has consistently fought for the consumer against the “Bigs”, Big Tech, Big Pharma, and Big Government. Now, he must turn his attention to Big Rail.

To protect the American pocketbook from a domestic monopoly as dangerous as any foreign blockade, the administration must ensure this merger is derailed before it can do permanent damage to our economy.

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