THE MBTA, desperate to replace its aging fleet of subway cars, is getting caught in the tariff crossfire between President Trump and China.
Trump initially proposed a double-digit increase in tariffs on imports of Chinese goods. China responded by hiking tariffs on US goods. And now Trump is retaliating by increasing the US tariff on Chinese goods to a total of 104 percent. The tariffs took effect early Wednesday morning.
MBTA officials declined to discuss what the tariffs will mean for its China-based subway car supplier, but it appears Trump’s tariffs would effectively double the cost of the subway shells and other parts being delivered to the Springfield factory where the cars go through final assembly.
A spokesperson for the Massachusetts affiliate of the Chinese company, CRRC MA, issued a statement on Wednesday saying the tariffs will increase project costs, strain operations, disrupt the company’s supply chain, and “negatively impact rail car production.” The statement said CRRC MA remains committed to the project and is seeking the help of partnering transit agencies and the Massachusetts congressional delegation.
The big question is who will pay the cost of the tariffs. “While there are no contractual provisions related to costs associated with new tariffs, the MBTA is actively assessing the impacts — potential or otherwise — on existing and future contracts,” the T said in a statement.
That statement — as vague as it is — represented a slight shift from what MBTA General Manager Phillip Eng said on the Boston Public Radio show on March 12. During that interview, Eng said any new tariffs would only impact CRRC and suggested the T would not have to cover their cost. “Right now, that is not part of the discussion,” he said.
Jim Aloisi, the former state transportation secretary and member of the advocacy group TransitMatters, said the tariff stakes are huge. The MBTA has been spending heavily to reduce slow zones on the subway system, but that effort will be thwarted if passengers get stuck riding subway cars that are beyond their 30-year useful life, he added.
Aloisi said the first priority is deciding whether the subway contract can move forward with the higher tariffs or whether the T needs to move in a different direction with a different supplier.
“No one’s blaming the T for Trump’s behavior, but we need to know what it is going to cost,” Aloisi said.
The rising tariffs come as CRRC-MA was turning around its performance, finally delivering well-working subway vehicles on time. The turnaround began after the MBTA a year ago signed a new contract with the company, forgiving $90 million in penalties that CRRC owed for failing to deliver vehicles on time and paying an extra $148 million to the Chinese company to cover unexpected cost increases brought about by the pandemic and tariffs on the subway cars imposed by the first Trump administration.
The changes brought the total cost of the CRRC-MA contract with the MBTA to more than $1 billion. Any new tariffs would be imposed on CRRC-MA, which would then have to decide whether to absorb that cost or attempt to pass all or a portion of it along to the MBTA.
Even though last year’s contract change for new subway vehicles addressed the lingering cost of previous tariffs, the new document did not address how any future tariffs would be handled, according to T officials.
The subway car contract is not expected to be completed until 2027. According to T officials, 142 of the 152 new Orange Line cars have been delivered and are operational while only 40 of the 252 new Red Line vehicles are running. The older Red Line cars are either 57, 37, or 31 years old.
Trump has been erratic in his approach to tariffs, announcing them and then quickly retracting them. But over the last week his stance has hardened on imposing tariffs, particularly on China. Indeed, leaders of the two nations have made harsh remarks about each other, suggesting a tariff war may be long lasting.
This story has been updated with comment from CRRC MA.