The Biden administration exerted additional pressure on ports negotiators Tuesday and announced an effort to monitor for supply chain weak spots on day one of a dockworkers strike that could ripple through the US economy.
But looming large are questions around what additional steps could be needed in the weeks ahead, from directly mediating the talks to perhaps even forcing union members back to work.
“They’re really having to thread the needle politically,” noted Bruce Chan, Stifel Transportation and Logistics Analyst, in a Yahoo Finance live appearance Tuesday morning adding that his base case is for a two-week stoppage.
Whether it’s shorter or longer, he added, could depend on “the willingness of the Biden administration to intervene here.”
The International Longshoremen’s Association union, which represents roughly 45,000 workers, began to set up picket lines just after midnight for the first time since 1977.
The US Maritime Alliance (USMX), which operates the ports and is negotiating with the union, added in a statement that “both sides have moved off their previous positions” but added that it has offered no concession on the key sticking point issue of automation at ports.
That leaves the White House weighing its options amid dwindling chances of a quick organic resolution to the complex talks.
There are two approaches the White House could take — but they come with deep downsides.
On the one side, letting the strike drag on for multiple weeks could threaten not just shortages of some perishable consumer goods but also manufacturing materials that may force the shutdown of factories and deeper economic repercussions.
After a few weeks if not sooner, multiple experts said, a strike could become a significant headwind to the economy not to mention the mindset of voters with election day just 35 days away.
The President’s second option is intervention and forcing strikers back to work. But that’s an approach that could anger union leaders and lead to significant political blowback for Biden who has long touted his loyalty to organized labor.
The President has the power to force strikers back to work for an 80-day “cooling off period” using a 1947 law that gives US government more power to intervene in labor disputes known as the Taft-Hartley act.
The White House repeatedly said last week that Taft-Hartley isn’t being considered but Tuesday only said it was “closely monitoring potential supply chain impacts and assessing ways to address potential impacts.”
An approach of wait and see
“Senior White House and Administration officials continue to work around the clock to get both sides to continue negotiating towards a resolution,” a White House statement added Tuesday, saying Biden “has directed his Supply Chain Disruptions Task Force to meet every day and prepare to address potential disruptions, if necessary.”
A first step that experts are watching for is direct mediation from White House officials and more overt forcing of the sides to the table.
The Biden administration has indeed taken a more direct role in other labor standoffs in recent years, forcing negotiators into a room in standoffs recently among healthcare workers, Major League Baseball, and railroads.
So far, top figures like Chief of Staff Jeff Zients, National Economic Advisor Lael Brainard, Secretary of Transportation Pete Buttigieg, and Acting Secretary of Labor Julie Su have been involved in a flurry of meetings and communications with both sides separately urging them to negotiate.
On Monday, according to the White House, Zients and Brainard met with USMX board members.
“The President and Vice President believe collective bargaining is the best way for both American workers and employers to come to a fair agreement,” added the White House Tuesday.
Some are already calling for further action.
“We need the administration to get the parties back to the table,” said National Retail Federation VP for supply chain and customs policy Jonathan Gold said Tuesday in a Yahoo Finance Live appearance. He notes that the stoppage could cost the US economy $5 billion a day and what ports need is certainty for the years ahead.
A further step would be the most politically dicey: a direct White House action under the Taft Hartley act.
“That’s like the emergency button,” former Democratic Representative Patrick Murphy noted Tuesday, adding that the first priority for the administration is getting the two sides to talk.
The economic effects of the stoppage could quickly become harder and harder to manage.
Stifel’s Chan noted Tuesday that an extended shutdown lasting more than 2 weeks could see effects increase “exponentially.”
“That’s obviously something the administration wants to avoid,” he added.
But the political pressure for intervention immediately ratcheted up Tuesday, with two top GOP lawmakers writing to the White House to ask it to intervene and restore port operations immediately.
“The economic impacts of failing to intervene and bring the parties to the negotiating table will be wide ranging, leaving the American consumer paying higher prices as we approach the holidays,” wrote House Transportation Committee leaders Sam Graves (R-MO) and Daniel Webster (R-FL).
But even an injunction wouldn’t necessarily end the pre-election and pre-holiday drama with experts warning that slowdowns could ensue before a deal is eventually reached even if workers are back on the job.
Ben Werschkul is Washington correspondent for Yahoo Finance.
Read the latest financial and business news from Yahoo Finance