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Facing New Tariffs, The Texas Manufacturing Industry Could Be Vulnerable

Kumar Appaiah/Flickr (CC BY-NC-SA 2.0)

From Texas Standard.

According to the Dallas Federal Reserve’s monthly Texas Manufacturing Outlook Survey, activity at Texas factories expanded in March. But the report also indicated that the production index, a key measure of state manufacturing conditions, fell 15 points – the sixth biggest drop since 2004. So what does this mean for the state and its manufacturing industry?

Ed Egan, a Baker Institute fellow and director of the institute’s McNair Center for Entrepreneurship and Innovation, says a drop of this magnitude is almost unprecedented outside of a recession.

“If it were to repeat these falls again next month, which we obviously hope it doesn’t, then we would have a negative outlook and we would be looking at a potential recession in manufacturing here in Texas,” Egan said.

He says industry leaders are also concerned about the impact of the Trump administration’s new steel and aluminum tariffs.

“They all said that the effects had only just started but were material,” he says. “Another drop is likely. If it’s as big as this one, that really would be problematic.”

Egan says it’s very clear that the tariffs caused the drop.

“This is a sector that has been recovering since 2016. It’s been doing okay but not fantastically well. If it takes a blow now, it’s not particularly stable. It’s not likely to do very well,” he says. “We would see thousands of layoffs.”

Written by Angela Bonilla.

Rhonda joined KUT in late 2013 as producer for the station's new daily news program, Texas Standard. Rhonda will forever be known as the answer to the trivia question, “Who was the first full-time hire for The Texas Standard?” She’s an Iowa native who got her start in public radio at WFSU in Tallahassee, while getting her Master's Degree in Library Science at Florida State University. Prior to joining KUT and The Texas Standard, Rhonda was a producer for Wisconsin Public Radio.
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