Trump -Told threats worries Texas business leaders

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Washington – President Donald Trump’s promise to charge punishing taxes on the country’s top trading partners already has Texas business life on edge, with even Republicans supporting the president who recognizes it can cause pain in the state.

Trump threatened to implement 25% duties on goods imported from Canada and Mexico and an additional 10% duty in China, which he exposed to duty during his first presidency. Mexico and Canada have threatened to charge retaliatory gaps in the United States.

Mexico is far from Texas’ largest trading partner, followed by Canada with China coming close to the back. Lawyers with free trade warn that customs duties on goods will be transferred to the consumer-what means higher prices for Texans. Any positive benefits, such as bringing back to the country, may not appear for years.

“There would undoubtedly be a negative financial impact if the tariffs were to be adopted,” said Glenn Hamer, President and CEO of the Texas Association of Business, a group that supports many of Trump’s other domestic policies.

Texas is proud to have one of the fastest growing economies in the country and one of the largest economies on Earth that largely because of its looser legislative environment and free exchange with other markets of high value. Texas is the largest export state in the United States – a point of pride for government manager Greg Abbott and that Abbott said Trump’s values ​​to make the United States an exporting power center. The state exports over $ 88.6 billion in goods to Mexico alone and another $ 23.4 billion to Canada.

Trump floated a Saturday’s target date to implement the tariffs, but there is still uncertainty about how – or if – they will be implemented. Since he first floated tariffs during his campaign, several of his defenders have suggested that the focus on tariffs could be a negotiating tactic.

Trump threatened the customs and said he will push Mexico and Canada to invest more from preventing illegal border crossings. He made a similar step on Colombia after it rejected deportation flights from the United States. Within hours after Trump threatened 25% duty on Colombia in retaliation, the Country allowed deportation flights to resume.

“Let’s wait and see what the president actually does on tariffs,” said late. Ted Cruz, chair of the Senate Trade Committee. “In the first period, President Trump used very similar threats of tariffs to force Mexico to cooperate in securing our boundary, and that produced enormous results.”

Cruz quoted the “remains in Mexico”, during which asylum seekers had to wait for their cases in Mexico in collaboration with the Mexican government. He refused to weigh in ways to relieve pain if the tariffs are actually implemented.

The second Texas senator also advised a cautious approach. “It’s a little difficult to separate the negotiation tactics from reality,” said Senator John Cornyn. “I think we will have to see how this happens in practice, and then continue the conversation because there is a point where tariffs add costs to consumers.”

The White House has claimed that the customs are happening, at least in Mexico and Canada, with tariffs for China still under consideration. The White House press secretary Karoline Leavitt assured journalists on Tuesday that “on February 1st date of Canada and Mexico still hold.”

Lawyers for free trade still look positive in the president’s trade position. During his first period, Trump negotiated US-Mexico-Canada Agreement, known as USMCA, to update trade agreements between the three countries. Hamer from Texas Business Group said many members of business feel “incredible optimism” about Trump after four years under President Joe Biden, as many of Texas’ largest industries felt limited them with rules. Members of both parties in Texas protested when Biden issued breaks of export permits for natural gas, which they claimed unfairly targeted Texas’ energy sector.

The US-Mexico-Canada Agreement “is the best trade agreement ever signed in the law in the United States,” Hamer said. “And we will see USMCA continue and be improved in ways that will increase trade between our three countries.”

Hamer said that the impact of tariffs would be impossible to quantify fully before being implemented. But the uncertainty of tariffs has already begun to influence the state’s economy, especially in southern Texas, where trade in Mexico is a blood of life.

Andrew Lawson Carranco, president of Government Affairs Council at Laredo Chamber of Commerce, said the uncertainty of tariffs and how they would be executed putting business in the city in an uncertain situation. The city is home to the largest port in the country and handles more than $ 300 billion a year that goes between the United States and Mexico. He said the city has seen increased exchange across the border to get goods through before they are charged to punish new prices.

“Of course we have heard a date about the implementation of customs rates, but no one is really sure that they will actually be implemented,” said Lawson Carranco. “So we have more questions than answers.”

Leaders in the Rio Grande Valley manufacturing industry agree that the immediate effects of tariffs would be devastating increases in prices for consumers. Joaquin Spamer, president of Border Trade Alliance Mexico, said Mexico would probably retaliate with their own tariffs on agricultural products they import from the US

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

South Texas gave a historic turn against supporting Trump at last year’s election, with the president won each South -Texas Congress District of the traditionally Democratic Fortress.

Spamer also pointed out that some products cross the border several times before being sold to consumers. This may apply to clothing made of Mexico using cotton or polyester that was imported from the US It is unclear whether goods will be exposed to duty at the final delivery or every time they cross the border.

“It won’t have a 25% duty, it will have a 25% duty on cotton and a 25% duty on the final product,” spamer said. “We calculate over 40% the actual price increase.”

Companies could theoretically offset the cost of consumers by reducing their profit margins or renegotiating prices with foreign suppliers, but prices would rise regardless, said Jorge Torres, a licensed customs broker, president of Interlink Trade Services. Either way, Torres said “It will be something that will be negative.”

Torres’ own business has a lot on the line. As a customs broker, he delivers storage along the border, which caters to cross -border transactions between Mexico and the United States, the proposed tariffs would probably make his own business experience a downturn with less demand for storage space.

Trump has previously used tariffs to bring more manufacture to the United States, and he has promised to make a similar pivot, especially with Semiconductors, a major industry in Texas. Texas legislators from both parties have tried to attract semiconductor -making through generous subsidies in an attempt to increase competitiveness with Asia, but Trump said he favors a more punitive approach.

He also implemented tariffs on Chinese goods during his last presidency, which the Biden administration maintained. Trump offered grants to Texas’ agricultural sector at the time to help it weather conflict with China, and Brooke Rollins, a Texan that is his choice for agricultural secretary, said she would support similar traits this time.

Still, if tariffs attract more American representations, the benefits will probably come much later than the immediate price increases. Setting up 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 they don’t happen overnight,” Torres said. “We may see some that can happen during his period, but I see that most of this, if that happens, will happen after he leaves the office.”

There are probably also negative effects on Mexico, said Adrian Gonzalez, also an American customs broker. Sore 30% of Mexico’s GDP is related to exports, and approx. 80% of this export is to the United States, Gonzalez said. Because Mexico is very dependent on exports, tariffs would ruin the economy and lead to more turmoil, such as an increase in drug cartel activity or mass immigration.

“The collaboration needed to tackle major problems such as immigration, fentanyl, security,” said Gonzalez, “they would be very damaged if the US decides to prevent Mexico from having a source of jobs and resources they need via trade. “

Disclosure: The Texas Association of Business has been an economic supporter of Texas Tribune, a nonprofit, non -partisan news organization partly funded by donations from members, foundations and business sponsors. Financial supporters do not play role in Tribune’s journalism. Find a complete list of them here.