Trump tariff threats get Texas economics leaders

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Washington – President Donald Trump vow to raise taxes on the country’s top trading partners already has the Texas Business Association to the brim, and even Republicans who support the President to recognize that he could cause pain in the state.

Trump threatened to implement 25% tariffs for goods imported from Canada and Mexico and an additional 10% tariff to China, which he had suspended tariffs under his first presidency. Mexico and Canada have threatened to raise retaliation tariffs in the United States.

Mexico is by far the largest trading partner Texas, followed by Canada, where China was closely behind. Proponents of free trade warn that tariffs for goods to consumers will be passed on what means higher prices for Texans. Positive advantages such as the return of production to the country may not appear for years.

“It would undeniably undeniable negative economic effects if tariffs were enacted,” said Glenn Hamer, President and CEO of Texas Association of Business, a group that supports many of Trump’s other domestic policy.

Texas is proud to have one of the fastest growing economies in the country and one of the largest economies on earth, which is mainly due to its relaxed regulatory environment and the free exchange with other high -quality markets. Texas is the largest export state in the USA – a point of pride for governor Greg Abbott and that Abbott said that Trump’s values ​​for the implementation of the USA are aligned with an exporting power package. According to Mexico alone, the state has over 88.6 billion US dollars and another 23.4 billion US dollars to Canada.

Trump made a target date on Saturday to implement the tariffs, but there is still uncertainty about how – or whether they are implemented. Since he was weakening tariffs for the first time during his campaign, some of his defenders have found that the focus on tariffs could be a negotiation tactic.

Trump threatened the tariffs and said that he wanted to put Mexico and Canada under pressure to invest more in preventing illegal border crossings. He took a similar step in Colombia after rejecting deportation flights from the USA. Within a few hours after Trump, which threatened 25% tariffs on Colombia as retaliatory measures, the country allowed the resumption of deportation flights.

“Let us wait and see what the president actually does on tariffs,” said Senator Ted Cruz, who is the chair of the Senate Commercial Committee. “During the first term, President Trump used very similar threats to tariffs to force Mexico to work together in securing our border, and it led to enormous results.”

Cruz quoted politics “Rest in Mexico”, under which asylum seekers had to wait for their cases in Mexico in cooperation with the Mexican government. He refused to weigh paths to relieve pain when the tariffs are actually implemented.

The other Texan Senator also advised a cautious approach. “It is a little difficult to separate the negotiation tactic from reality,” said Senator John Cornyn. “I think we have to see how this happens in practice and then to continue the conversation because there is a point where tariffs increase costs.”

The White House claimed that the tariffs take place at least in Mexico and Canada, whereby the tariffs for China are still considered. The Press spokesman for the White House, Karoline Leavitt, assured the reporters on Tuesday that “February 1st still applies to Canada and Mexico”.

Proponents of free trade still see positive people in the president’s trading position. During his first term, Trump negotiated the agreement on the US Mexico Canada, which is colloquially known as USMCA, to update trade agreements between the three countries. Hamer from the Texan Business Group said that many members of the business world feel “incredible optimism” about Trump after four years under President Joe Biden, which many of the largest industries in Texas had restricted with the regulations. Members of both parties in Texas protested when bidges spent a break on liquefied gas export permits, which they were wrongly targeted in Texas.

The agreement on the US Mexico Canada is “the best trade agreement ever signed in the United States,” said Hamer. “And we want the USMCA to continue and be improved in a way that increases trade between our three countries.”

Hamer said the effects of tariffs would be impossible before being implemented. However, the uncertainty of the tariffs has already started to influence the economy of the state, especially in South Texas, where trade with Mexico is a elixir of life.

Andrew Lawson Carranco, Chairman of the Chamber of Commerce of Government Affairs in the Laredo Chamber of Commerce, said the uncertainty of the tariffs and how they would be executed, the business world in the city provides a precarious situation. The city houses the largest port in the country and were worth the value of more than 300 billion US dollars a year between the USA and Mexico. He said the city had a increased exchange across the border to get goods before being charged to punish new prices.

“Of course we heard a date about the implementation of tariffs, but nobody is really sure that they are actually implemented,” said Lawson Carranco. “So we have more questions than answers.”

Managers in the processing industry in the Rio Grande Valley agree that the immediate effects of tariffs would be devastating price increases for consumers. Joaquin Spamer, President of the Border Trade Alliance Mexico, said

“There is a very long list of US agricultural products sold in Mexico,” said Spamer. “You know that the border base for Trump is the agricultural communities. That is why they increase the tariffs there immediately.”

South Texas has made a historical momentum to support Trump in the elections of the past year, with the president won every South Texan Congress district in the traditionally democratic stronghold.

Spamer also pointed out that some products exceed the border several times before they are sold to consumers. This can apply to clothing that is manufactured in Mexico with cotton or polyester that have been imported from the USA. It is unclear whether goods are subject to the final delivery or every time they cross the border.

“It will not be 25% a tariff, a tariff of 25% on the cotton and a tariff of 25% on the end product will have,” said Spamer. “We calculate over 40% of the actual price increase.”

Theoretically, companies could compensate for the costs for consumers by reducing their profit margins or new negotiation prices with foreign suppliers, but prices would increase independently, said Jorge Torres, a licensed customs broker, the President of Interlink Trade Services. In any case, Torres said: “It will be something that will be negative.”

Torres’ own business has a lot at stake. As a customs broker, it offers storage along the border, which focuses on cross -border transactions between Mexico and the USA.

Trump previously used tariffs to bring more production to the United States, and he was sworn in making a similar pivot, especially for semiconductors, a large industry in Texas. The Texas legislators of both parties have tried to attract the production of semiconductors through generous subsidies to increase competitiveness with Asia, but Trump said that he favors a more punishable approach.

During his last presidency that maintained the bidges, he also implemented tariffs for Chinese goods. At the time, Trump offered subsidies for the agricultural sector in Texas to help him survive the trade conflict with China, and Broke Rollins, a Texan woman who is his choice for the agricultural secretary, said she would support similar steps this time.

However, if the tariffs attract more US production, the advantages will probably come much later than the immediate price increases. The establishment of factories and other elements of the supply chain requires planning and investments that can take years.

“These types of investments in factories and opening facilities do not appear overnight,” said Torres. “We could see some that could happen during his term, but I see that most of it will happen when it happens after leaving the office.”

There are probably also negative effects on Mexico, said Adrian Gonzalez, also a US customs broker. About 30% of GDP Mexico are related to exports and about 80% of these exports are to the USA, said Gonzalez. Since Mexico is heavily dependent on exports, the tariffs would destroy the economy and lead to more turbulence such as an increase in the activity of the drug cartel or mass immigration.

“The collaboration that is necessary to tackle major problems such as immigration, fentanyl,” said Gonzalez, “these would be terribly damaged if the United States decided to prevent Mexico from having a source of jobs and resources that it need on the trade. “

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