Upheaval in international trade over the last few years and the resulting squeeze on Americans’ pocketbooks have highlighted the benefits that Americans receive from having partners and supply chains that are proven and reliable—and the costs that come when that dependability is threatened.
American infrastructure and transportation are critical factors in the equation. The proposed combination of Union Pacific (UP) and Norfolk Southern (NS) railroads is being positioned as part of the answer to American economic resiliency for years to come. Especially significant as North American trade continues to advance American prosperity.
While not always on the front pages, rail freight is in fact a pillar for the U.S. economy. Each year, railroads move about 1.5 billion tons of agricultural products, construction materials, vehicles, energy, and other goods. The U.S. is one of the few developed nations without a coast-to-coast railroad, leaving freight to change hands at congested gateways that add costs and delays.
A report from the Association of American Railroads (AAR) notes that “rail is a major driver of economic activity, generating $233.4 billion in total economic output in 2023.”
Another mainstay of the American economy, perhaps surprisingly, continues to be trade with Mexico. In 2024, over 80 percent of Mexico's total exports were to the United States, and over 40 percent of its total imports were from the United States. Motor vehicle parts, cell phones, industrial equipment, and a multitude of other goods amounted to a record $872.83 billion in trade last year.
As one might expect with a neighbor of that size, rail is a pivotal factor in capturing the full economic benefit of growth in U.S.-Mexico trade and allows American businesses to capture an even greater share of future growth.
In 2023, Union Pacific launched a new eastbound intermodal service connecting Mexican industrial markets with key U.S. Southeast markets such as Florida and North Carolina. The proposed merger with Norfolk Southern will expand these connections along the East Coast, establishing new single-line connections for U.S. distribution hubs across the Southeast and Mid-Atlantic, connecting 43 states and more than 100 ports.
Opening new American markets to cross-border commerce would give U.S. businesses more direct access to one of the world’s most dynamic trade corridors. American industries would gain improved access to existing trade flows, including inland agricultural producers, Midwest manufacturers, and Southeastern distribution centers.
The operations of a faster, more reliable freight network capitalize on American advantages in infrastructure and logistics. Fewer handoffs and fewer interchange delays mean more reliability and faster delivery times for businesses and consumers. The efficiency is especially significant for small businesses, as it makes their growth more viable.
The improved efficiency is also projected to take an estimated 2.1 million trucks off the road annually and save shippers an estimated $3.5 billion each year — savings that flow through to consumers.
The U.S. Department of Transportation previously forecasted that U.S. freight movement would rise by 30% by 2040. Those projections occurred well before a merger was even discussed, meaning that the benefits will be enhanced by growing investment and demand now predicated on the merger itself.
Macroeconomic gains are built from countless local ones. For communities located along key rail hubs, increased job creation and activity would certainly be a welcome boost. Workers in rural areas and other underserved communities already make up a vital share of the industrial and transportation workforce. These workers bear the brunt of supply chain disruptions, but they also stand to benefit most when systems become faster, cheaper, and more reliable.
Americans now navigating economic uncertainty and pressure on their family budgets from trade disruptions, tariffs, and the effects of war on energy prices could use a healthy dose of stability. The infrastructure and systemic improvements from the realization of a long-sought-after transcontinental railroad stand as a bright spot. And with U.S.-Mexico trade more valuable to American economic interests than ever before, now is the time to push toward measures that promote cooperation and mutual prosperity.
Mario H. Lopez is the President of the Hispanic Leadership Fund, a public policy advocacy organization that promotes liberty, opportunity, and prosperity for all.
