Trump’s 5 percent tax on Mexican goods over Central American immigration would hit Texas harder than any other state.
On Thursday, President Trump announced on Twitter that he plans to impose a 5 percent tariff on all goods coming into the United States from Mexico, effective June 10. The tariff, he warned, would gradually increase until Mexico halts the flow of mostly Central American asylum-seekers who travel through its territory to reach the U.S. border. Before the announcement, Mexico had already ramped up immigration enforcement at its Guatemalan border, but apparently not enough to assuage Trump.
Mexico’s president, Andrés Manuel López Obrador, fired back later that day with a letter to Trump in which he warned: “Remember that I do not lack courage; I’m no coward nor faint of heart — rather, I act on principles.” Despite the strongly worded letter, López Obrador is generally maintaining a conciliatory tone and insisting the conflict can be resolved through dialogue. High-level U.S. and Mexican officials are meeting in Washington, D.C., this week. The announcement has already rattled financial and currency markets, as the Dow fell more than 300 points on Friday and the Mexican peso has taken a dip as well.
Trump’s move could backfire, since hampering the Mexican economy could decrease the country’s ability to handle Central American migrants, Mexican officials said Monday.
Further, the effort to strongarm Mexico comes as the United States-Canada-Mexico Agreement (USCMA), the proposed replacement for NAFTA, looked to be in the final stages of completion. “Markets don’t like uncertainty and we’re sure uncertain right now,” Texas farmer Pete Bonds told the Observer last summer, when Trump threatened similar tariffs as details of USCMA were being negotiated. Texas farmers have also been feeling the effects of Trump’s ongoing trade war with China, which has caused dips in several agriculture commodities produced here, but most have stopped short of blaming the president.
If Trump’s proposed tariffs do take effect, the hardest-hit U.S. state would be the longtime Republican stronghold of Texas, whose largest trading partner is Mexico.
In 2015, Texas traded more than $176 billion worth of goods with its neighbor to the south, dwarfing the $71 billion in trade that Mexico carried out with California. And while your mind may jump to inessential goods like avocados and tequila, the United States’ top imports from Mexico are actually automobiles and car parts. Consumers would see prices on a wide variety of items increase steadily, but perhaps not immediately, economists say. About $20 billion worth of goods — mostly automotive parts — flowed through the Laredo port alone in March, making it the busiest port in the country.
No wonder, then, that even Republicans in Texas are squeamish about the president’s latest move, especially as 2020 campaign season nears. As an aide to U.S. Senator John Cornyn, who will be directly below Trump on the 2020 ballot, told the Texas Tribune: “Senator Cornyn supports the President’s commitment to securing our border, but he opposes this across-the-board tariff which will disproportionately hurt Texas.”