Biden to stay out of port strike as trade flows halt, union boss threatens to ‘cripple’ economy

The White House has remained firm in its position that it will not intervene in negotiations between port workers and dock employers as trade flows screech to a halt and the lead union boss threatens to "cripple" the economy less than 35 days before the presidential election.

A general strike spread across most of the major ports on the U.S. East Coast Tuesday as the labor union representing the workers, International Longshoremen’s Association (ILA), said dock employers failed to give in to their demands. 

The strike threatens to plug up an estimated $2.1 billion in daily trade flows from these busy ports as the presidential election and holiday seasons fast approach. 

Republicans and hundreds of industry associations have called on President Joe Biden to invoke the Taft-Hartley Act, a law originally passed in 1947 that gives the president the authority to intervene in strikes if they threaten to cause a national emergency. The act was last used in 2002 by President George W. Bush to reopen ports on the West Coast after employers prevented longshoreman from entering their facilities. 

But before the strike began Tuesday, Biden signaled he would not invoke the post-war act to end the strike, especially given the immense damage from Hurricane Helene across the U.S. Southeast and persistent inflation as the holiday season approaches. 

“Mr. President, will you intervene in the dockworkers strike if they go on strike on Tuesday?” a reporter asked the president. 

“No,” Biden replied. 

“Why not?” 

“Because there’s collective bargaining, and I don’t believe in Taft-Hartley,” Biden said. 

The White House on Tuesday again confirmed the president would not use the authority under the act to intervene in the negotiations even as the union appeared to dig in its heels for the long haul. The White House indicated its calculus stems from briefings by federal agencies on the potential impacts of the strike which “are expected to be limited at this time” on consumers. 

Biden is also motivated by political calculus with the presidential election just more than a month away. Breaking up the strike with his presidential authority could damage Kamala Harris’ chances with a key union worker constituency, among which previous polls show she has struggled to maintain Biden’s levels of support. Leaving the strike unaddressed could cripple the U.S. economy—in the union boss’s own words—under his watch. Historically, a downturn in the economy rarely favors the incumbent party, which in this case would hurt Harris’ election chances. 

Biden and Harris may be banking on the assessment of his federal agencies, which briefed both the president and Vice President Harris on how the strike could impact the prices of major goods. According to Politico, those agencies' assessments of the strike showed little expected impact on major goods like grain, oil, gasoline, and other fuels imports and exports. 

The Biden administration appears to have decided on a more indirect approach in hopes of pressuring the two sides to come to an agreement without inserting himself directly. He reportedly charged his Transportation and Labor Secretaries to ensure smooth negotiations between the ILA and United States Maritime Alliance (USMX)—the coalition of container carriers, employers and port associations—in hopes of helping to solidify a deal quickly. 

But, the ILA union boss bluntly told the public his workers are in it for the long hall, threatening to “cripple” the United States economy if the longshoreman are not given higher wages and protected from future automation at American ports. In an interview several weeks ago as negotiations between the ILA and the USMX were not bearing fruit, he warned about the dire consequences of a strike. “In today’s world, I’ll cripple you,” ILA President Harold Daggett said in a video post. “I will cripple you.”

The union and the USMX remain far apart in negotiations despite a last minute concession by the port operators association to increase wages by 50%—still well short of the over 70% increase requested by the union over six years. Daggett also cited language in the proposed agreement he believes is not “strong enough” to protect workers from future automation at ports, which he believes will lead to a loss of union jobs. 

“They have language in there now that’s not strong enough,” Daggett told CNN. “Because what happens is they come in with new technology…and that means the trucks are coming in and they’re already checked in somewhere else and not using the checkers in the ILA.” 

He promised that if the USMX does not agree to stronger protections, he won’t resume negotiations. 

“It’s not fair,” Daggett reportedly said. “And if we don’t put our foot down now, they would like to run over us, and we’re not going to allow that.”

It is not clear what immediate economic impacts the port strike will have on the American economy and whether a prolonged standoff could "cripple" the economy ahead of the election. However, over 170 trade associations and industry groups across the United States sent a letter to President Biden last month warning of serious economic impacts. 

“A strike at this point in time would have a devastating impact on the economy, especially as inflation is on the downward trend,” the groups wrote in the letter. On Monday, the U.S. Chamber of Commerce echoed the concerns, pointing to the importance of the 36 ports impacted the general strike across the Atlantic and Gulf coasts by trade volume. 

“Americans experienced the pain of delays and shortages of goods during the pandemic-era supply chain backlogs in 2021. It would be unconscionable to allow a contract dispute to inflict such a shock to our economy,” wrote Suzanne Clark, president and CEO of the U.S. Chamber of Commerce, in a letter to Biden. 

“These ports collectively handle more than 68% of all containerized exports and 56% of imports for the nation, with a daily trade value exceeding $2.1 billion,” she added, citing figures calculated by the National Association of Manufacturers. According to that group, those ports also handle a significant volume of containerized pharmaceutical product imports (91%), vehicle imports (54%), and air and spacecraft imports (51%). 

Industry experts are not predicting an immediate impact on the economy, however, shortages may emerge if the strike drags on without a resolution. 

“The costs of the strike would escalate over time as backlogs of exports and imports grow,” Citigroup economist Andrew Hollenhorst said, according to CNBC. “Perishable products like imported fresh fruit might be first to come into short supply. If the strike extends beyond a few days, shortages of certain production inputs could eventually slow production and raise prices for manufactured goods like autos.”

Indeed, perishable goods like fruit may see more immediate impacts at a time when grocery store prices remain elevated. Both presidential candidates have different explanations for why prices are so high: Trump blames inflation caused by increased government spending by the Biden administration while Harris claims grocery companies’ quest for increased profits are to blame. 

Whatever the cause, a strike-connected shortage of perishable goods will not lower prices. For example, more than a million metric tons of bananas are imported through the striking ports, representing about a quarter of U.S. banana consumption. Other imported goods like sugar, alcohol, and cocoa may also be impacted by the strikes. 

With just over a month until the election, Kamala Harris has repeatedly called out corporate profits on the campaign trail as a cause of the inflation still permeating the economy. For example, she has proposed anti-gouging measures to lower prices at grocery stores as part of her policy plans to support the middle class.

The White House on Tuesday released a statement echoing Harris’ position, appearing to blame USMX for chasing profits rather than supporting its workers. The White House urged USMX to “come to the table and present a fair offer to the workers” and called out ocean carriers for high profits since the start of the COVID-19 pandemic. 

“Ocean carriers have made record profits since the pandemic and in some cases profits grew in excess of 800 percent compared to their profits prior to the pandemic,” the statement reads.

“Executive compensation has grown in line with those profits and profits have been returned to shareholders at record rates. It’s only fair that workers, who put themselves at risk during the pandemic to keep ports open, see a meaningful increase in their wages as well,” it continues. 

Harris’ opponent, Donald Trump, has a different explanation for the union strike, but stopped short of other Republicans who had called for Biden to break it up with the Taft-Hartley Act as he seeks to court union voters in the upcoming election. He believes the longshoremen are suffering from the increased costs caused by high inflation he says was created by the Biden-Harris administration. 

“The strike was caused by the massive inflation that was created by the Harris-Biden regime," Trump told Fox News Digital in a statement. "Everybody understands the dockworkers because they were decimated by this inflation, just like everybody else in our country and beyond.”