Donald Trump’s tariffs will likely take the biggest toll on Texas, multiple economics experts told Newsweek.
Last week, the president-elect announced plans to impose 25% tariffs on all goods imported from China, Canada, and Mexico “until such time as drugs, particularly Fentanyl, and all illegal aliens stop this invasion of our country!”
Tariffs that Trump is putting on Mexico are likely to make the prices of many imported goods go through the roof, but they would hurt the U.S. economy in a lot more ways.
In particular, they will make things hard in Texas, where most people voted for the president-elect who supports tariffs.
Newsweek talked to Ray Perryman, CEO of the financial analysis firm The Perryman Group. He said that Trump’s tariffs are most likely to hurt Texas the most “because of its proximity to and integration of supply chains with Mexico.”
Perryman said, “Texas would be hit hard, and we think it will be about $46.9 billion a year in gross state product, which is about 1.7% of the total, and about 370,000 jobs.”
Perryman warned that putting 25% tariffs on all goods from Mexico and Canada would cost the U.S. economy $250.6 billion a year and take away about 1.97 million jobs, which is almost 1% of the global gross domestic product.
The senior fellow at the Peterson Institute for International Economics, Gary Clyde Hufbauer, told Newsweek that he agreed that the tariffs would have a “severe effect” on Texas.
“Texans will have to pay more for things like avocados, mangos, beer, tequila, and more. Also, the drop in cross-border truck and rail traffic will put a lot of Texans out of work,” he said.
Then there is the money Texas loses when it sells goods, cattle, gas, oil, and electricity to Mexico. Add to that a drop in Mexican tourists coming to Texas.
The Texas Standard talked to Tony Payan, who runs the Centre for the U.S. and Mexico at the Baker Institute for Public Policy at Rice University. He said that Trump’s proposed tariffs could have “high stakes for both Texas and Mexico.”
They trade $800 billion worth of goods with each other every year. “About $400 billion, or half of that, is what we could call intra-firm trade,” Payan said.
It is trade between companies that make things, like parts that come from Mexico or the US and are put together in Mexico to finish cars and other goods that are traded.
Payan also said he was not sure if Trump would “keep his word” and put tariffs in place, but he thought that in the end, the president-elect would see how “integrated” the two economies had become.
In an interview with Newsweek, Maxwell Marlow, director of research at the Adam Smith Institute, expressed similar worries.
He said that Trump’s tariffs would “be especially devastating for areas such as Texas, where goods cross borders multiple times during their production.”
Marlow also said that the U.S. should be ready for retaliatory tariffs from Mexico, which would hurt Texas the most.
Professor Dennis Jansen, head of the economics department at Texas A&M University, told Newsweek that one reason why retaliatory tariffs would be so bad is that a huge 29% of Texas’s exports go to Mexico.
“If there is retaliation from abroad, like if Mexico follows through on its threat to raise tariffs on U.S. goods sent to Mexico, this will make even less people want to buy Texas (and U.S.) goods,” Jansen said.
