Tariff on Mexican Goods Would Have High Price for Texas Economy
From Texas Standard:
President Donald Trump’s support of imposing a 20 percent tariff on all Mexican imports to the U.S. has some Texans running to the supermarket to stock up on Topo Chico and avocados. The proposal suggested on Thursday is designed by the Trump administration as leverage to get our southern neighbor to pay for a wall extending across the southern border.
The $60 billion in revenue generated by this tariff would provide ample funding for a border wall, but the toll on U.S. consumers, Mexico, and the Texas economy would be extraordinary, according to experts.
Tom Fullerton, professor of economics at the University of Texas-El Paso, says the tariff would have dire consequences for all parties involved.
“It’ll have a pretty chilling effect on economic activity on both sides of the border,” Fullerton says. “In Mexico specifically, it would disrupt things enough that the Mexican economy would probably go into a recession fairly quickly.”
North of the border, the U.S. wouldn’t fare much better.
“Most of the trade between the U.S. and Mexico is in the form of intra-industry trade,” Fullerton says. “Those supply chains are so interlinked that a border tax like this is going to interrupt economic activity on this side of the border as well.”
Because of Texas’ close economic ties to Mexico, they will bear the brunt of the burden.
“Texas will be on the frontline of the economic fallout of this policy if it gets implemented,” Fullerton says. “A lot of people are saying that now the Trump administration is walking this back, and hopefully that is the case.”
Not only would the consequences outweigh any positive benefits, but Fullerton says the tariff would actually be counterintuitive to the problem it’s designed to solve. Historically, when Mexicans were thrown out of work during the Great Depression and the Mexican Revolution, their first reaction was to migrate north of the border and seek gainful employment here in the United States.
“In terms of immigration policy, this would be the wrong step to take by an administration who wants to reduce undocumented immigration,” Fullerton says.
Written by Morgan O’Hanlon.