President Trump's threat to impose tariffs on goods from Canada, Mexico, and China is causing concern in Texas, a state heavily reliant on international trade. The potential economic impact of these tariffs is a major topic of debate.
President Donald Trump ’s vow to levy punishing taxes on the country’s top trading partners is already having the Texas business community on edge, with even Republicans who support the president acknowledging it could have a negative economic impact. Trump threatened to implement 25% tariffs on goods imported from Canada and Mexico and an additional 10% tariff on China, which he subjected to tariffs under his first presidency.
Mexico and Canada have threatened to levy retaliatory tariffs on the United States. Mexico is by far Texas’ largest trading partner, followed by Canada with China coming closely behind. Free-trade advocates warn that tariffs on goods will be passed onto consumers — meaning higher prices for Texans. Any positive benefits such as bringing manufacturing back to the country may not appear for years. “There would undeniably, indisputably be a negative economic impact if tariffs were to be enacted,” said Glenn Hamer, president and CEO of the Texas Association of Business, a group that supports many of Trump’s other domestic policies. Texas prides itself in having one of the fastest growing economies in the country and one of the largest economies on earth, due largely to its looser regulatory environment and free exchange with other high value markets. Texas is the largest exporting state in the U.S. — a point of pride for Gov. Abbott said aligns with Trump’s values for making the U.S. an exporting powerhouse. The state exports over $88.6 billion in goods to Mexico alone, and a further $23.4 billion to Canada. Trump floated a Saturday target date to implement the tariffs, but there is still uncertainty over how — or if — they will be implemented. Since he first floated tariffs during his campaign, several of his defenders have posited that the focus on tariffs could be a negotiating tactic. Trump threatened the tariffs, saying he wants to pressure Mexico and Canada to invest more in preventing illegal border crossings. He made a similar move on Colombia after it rejected deportation flights from the United States. Within hours of Trump threatening 25% tariffs on Colombia in retaliation, the Colombian government agreed to resume deportation flights. Sen. Ted Cruz cited the “Remain in Mexico” policy, under which asylum seekers had to wait out their cases in Mexico in cooperation with the Mexican government. He declined to weigh in on ways to relieve pain if the tariffs are actually implemented. The other Texas senator also advised a cautious approach. “It's a little hard to separate the negotiation tactics from reality,” Sen. John Cornyn said. “I think we're gonna have to see how this happens in practice, and then continue the conversation, because there comes a point at which tariffs add cost to consumers.” The White House has asserted that the tariffs are happening, at least on Mexico and Canada, with tariffs on China still under consideration. White House Press Secretary Karoline Leavitt assured reporters Tuesday that “the Feb. 1 date for Canada and Mexico still holds.” Free trade advocates still see positives in the president’s trade position. During his first term, Trump negotiated the US-Mexico-Canada Agreement, colloquially known as the USMCA, to update trade agreements among the three countries. Hamer, of the Texas business group, said that many members of the business community feel “incredible optimism” about Trump after four years under President Joe Biden, who many of Texas’ largest industries felt constrained them with regulations. Members of both parties in Texas protested when Biden issued pauses on liquefied natural gas export permits, which they asserted unfairly targeted Texas’ energy sector. The US-Mexico-Canada Agreement “is the best trade deal ever signed into law in the United States,” Hamer said. “And we want to see the USMCA continue and to be enhanced in ways that will increase trade between our three countries.” Hamer said the impact of tariffs would be impossible to fully quantify before they are implemented. But the uncertainty of the tariffs is already beginning to impact the state’s economy, particularly in South Texas where trade with Mexico is a lifeblood
TRADE WAR TARIFFS TEXAS ECONOMY MEXICO CANADA CHINA DONALD TRUMP
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