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Washington – The wish of President Donald Trump to collect punishment on the best business partners in the country already has the Business Community of Texas to the end, with even Republicans who support the president, recognizing that this could cause pain in the state.
Trump threatened to implement 25% prices on goods imported from Canada and Mexico and an additional 10% price on China, which he submitted to prices under his first presidency. Mexico and Canada have threatened to take reprisal prices in the United States.
Mexico is by far the largest trading partner in Texas, followed by Canada with China, which is closely closer. The defenders of free trade warn that the prices on goods will be transmitted to consumers – which means higher prices for Texans. Any positive advantage such as the return of manufacturing to the country may not appear for years.
“There would undoubtedly be, indisputably a negative economic impact if prices were to be promulgated,” said Glenn Hamer, President and Chief Executive Officer of the Texas Association of Business, a group that supports many of Trump’s other national policies.
Texas is proud to have one of the fastest growth savings in the country and one of the largest economies on the land, largely due to its more loose regulatory environment and its free exchange with d ‘other high value markets. Texas is the largest exporting state in the United States-a pride point for Governor Greg Abbott and that Abbott said that Trump’s values to make the United States an exporting power. The state exports more than $ 88.6 billion in Mexico only, and an additional $ 23.4 billion in Canada.
Trump has floated a target date on Saturday to implement the prices, but there is still an uncertainty about how – or if – they will be implemented. Since he launched the prices for the first time during his campaign, several of his defenders have applied that the emphasis on prices could be a negotiation tactic.
Trump threatened the prices, saying that he wanted to put pressure on Mexico and Canada to invest more in the prevention of illegal border passages. He made a similar movement on Colombia after rejecting the expulsion flights from the United States. In the following hours that Trump threatened 25% of prices on Colombia in retaliation, the country allowed the flights of deportation to resume.
“Let us wait to see what the president really does on the prices,” said senator Ted Cruz, who chairs the Senate trade committee. “In the first mandate, President Trump used very similar threats to forcing Mexico to cooperate to ensure our border, and that produced huge results.”
Cruz quoted politics to “stay in Mexico”, under which asylum seekers had to wait for their cases in Mexico in cooperation with the Mexican government. He refused to weigh on the means of relieving the pain if the prices are really implemented.
The other Texas senator also advised a cautious approach. “It is a bit difficult to separate the negotiation tactics from reality,” said senator John Cornyn. “I think we are going to have to see how it goes in practice, then continue the conversation, because there is a time when the prices add costs to consumers.”
The White House said the prices occur, at least in Mexico and Canada, with prices on China still under study. The White House press secretary Karoline Leavitt assured journalists on Tuesday that “the date of February 1 for Canada and Mexico still holds”.
The defenders of free trade still see positive points in the commercial position of the president. During his first mandate, Trump negotiated the American-Mexican-Canadian agreement, familiarly known as the USMCA, to update the trade agreements between the three countries. Hamer of Texas Business Group said that many business members feel “incredible optimism” about Trump after four years under President Joe Biden, that many Texas Largest Industries have deemed them the constraints with regulations. Members of both parts of Texas protested when Biden issued breaks on liquefied natural gas export permits, which they have unjustly affirmed of Texas’ energy sector.
The American-mexico-Canada agreement “is the best trade agreement ever signed in the United States,” said Hamer. “And we want to see the USMCA continue and be improved in a way that will increase trade between our three countries.”
Hamer said the impact of prices would be impossible to quantify fully before being implemented. But the uncertainty of the prices already begins to have an impact on the state economy, in particular in southern Texas, where trade with Mexico is a vital block.
Andrew Lawson Carranco, president of the government’s government council of the Laredo Chamber of Commerce, said that the uncertainty of the prices and the way they are executed puts the business in the city in a precarious situation. The city is home to the largest port in the country, with more than $ 300 billion in goods per year, passing between the United States and Mexico. He said that the city had seen an increase in exchanges across the border to pass the goods before being able to punish new prices.
“Of course, we have heard a date on the implementation of prices, but no one is really sure that they will really be implemented,” said Lawson Carranco. “So we end up with more questions than answers.”
The leaders of the manufacturing industry of the Rio Grande valley agree that the immediate effects of the prices would be a devastating increase in prices for consumers. Joaquin Spamer, president of the Border of the Trade Alliance Mexico City, said that Mexico would probably be to fight back with their own prices on the agricultural products they import from the United States
“There is a very long list of American agricultural products sold in Mexico,” said Spamer. “They know that the border base of Trump is agricultural communities, which is why they increase the prices immediately there.”
South Texas did a historic swing to support Trump in last year’s elections, the president winning each district of the South Texas Congress in the traditionally democratic bastion.
Spamer has also stressed that some products are going through the border several times before being sold to consumers. This can apply to clothes made in Mexico using cotton or polyester that has been imported from the United States, it is not clear if the goods will be subject to prices on final delivery or each time Let them cross the border.
“It will not have a price of 25%, it will have a 25% price on cotton and a 25% price on the final product,” said Spamer. “We calculate more than 40% actual increase in prices.”
Companies could theoretically compensate for the costs for consumers by reducing their beneficiary margins or by renegotiating prices with foreign suppliers, but the prices would increase, said Jorge Torres, an approved customs broker who is president of Interlink Trade Services. Anyway, Torres said: “It will be something that will be negative.”
Torres’ own company has a lot of things at stake. As a customs broker, it provides storage along the border which is aimed at cross-border transactions between Mexico and the United States, the proposed prices would likely lead to His own business has a slowdown with less request for a warehouse space.
Trump previously used prices to provide more manufacturing in the United States, and he promised to make a similar pivot, in particular with semiconductors, a major industry in Texas. The legislators in Texas of the two parties tried to attract the manufacture of semiconductors by generous subsidies in order to increase competitiveness with Asia, but Trump said that he promotes a more punitive approach.
He also implemented prices on Chinese products during his last presidency that the Biden administration maintained. Trump offered subsidies to the Texas agricultural sector at the time to help him resist the trade conflict with China, and Brooke Rollins, a Texan who is his choice for the Secretary of Agriculture, said that she This time would support similar movements.
However, if prices attract more American manufacturing, the advantages will probably come much later than immediate price increases. The implementation 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, they do not occur overnight,” said Torres. “We could see some that could occur during his mandate, but I see that most of that, if that happens, will happen after leaving his duties.”
There will also probably be negative effects on Mexico, said Adrian Gonzalez, also an American broker. About 30% of Mexico’s GDP is linked to exports and around 80% of these exports are to the United States, Gonzalez said. Since Mexico is based strongly on exports, prices would devastate the economy and lead more agitation, such as an increase in the activity of the drug cartel or mass immigration.
“The collaboration necessary to solve more important problems such as immigration, fentanyl, security,” said Gonzalez, “they would be terribly damaged if the United States decided to prevent Mexico from having a source D ‘jobs and resources they need via trade. “
Disclosure: The Texas Association of Business was a financial supporter of Texas Tribune, a non -profit non -partisan press organization which is partly funded by donations of members, foundations and company sponsors. Financial supporters do not play any role in the journalism of the gallery. Find a full list of them here.
