Business leaders, economists, and Republican officials agree that President Trump's proposal for a 20% tax on imports from Mexico to pay for that proposed border wall would lead to massive economic dislocation in Texas and potentially a 'Texas depression,' News Radio 1200 WOAI reports.
Economist Ray Perryman and other experts on the Texas economy say the days are long gone when a car, for example, is 'made in Mexico.'
The Federal Reserve Bank of Dallas estimates that vehicles assembled in Mexico and then imported into the U.S., are made up of between 40% and 60% parts made in the U.S., mainly in Texas, and manufacturing those parts, from seat cushions to high tech devices, are a major part of the Texas economy.
"Mexico is out largest trading partner, so a lot of the goods that come into Texas now would end up being taxes," Perryman told News Radio 1200 WOAI.
In addition, the 20% duty would be paide not be Mexico or the Mexican people, but by American consumers, in the form of sharply higher prices, according to Mike Davis, an economist at Southern Methodist University.
"If we tax their imports, a lot of that is going to come out of the pockets of Americans," Davis told News Radio 1200 WOAI. "That will be $10 billion that will come out of American pockets, not Mexican pockets."
Several economists pointed out that since the approval of the North American Free Trade Agreement in 1992, the U.S. and Mexico have become essentially one market, with the free flow of goods improving both nations' economies.
Texas has a trade surplus with Mexico of nearly $10 billion more heading south into Mexico in 2015 than coming north. If the U.S. imposes a tax on imports from Mexico, Mexico is likely to retaliate with a tax on imports from the U.S., and the $92 billion dollars in items exported by Texas in 2015 amount to everything from automobile and manufactured parts, to agricultural products, to high tech equipment to petroleum and refined products.
Hundreds of thousands if not millions of Texas jobs are directly linked to exports to Mexico, according to recent figures.
"Texas' number one trading partner by far is Mexico, and imposing a 20% tax on Mexican imports to fund a border wall would mean a loss of jobs and a hit to state tax revenues," the Texas Association of Business said in a statement e-mailed to 1200 WOAI.
U.S. Rep Will Hurd of San Antonio, who represents more than 500 miles of the Texas Mexico border, and who famously broke with Trump during the primary season, called the proposed border tax 'devastating. "This would be harmful to the thousands of U.S. companies that work hand in hand with Mexican companies to produce goods and services, and expensive to the millions of middle class families who will feel the pinch as prices go up," Hurd said.
Texas officials are also questioning Trump's fixation with Mexico, which has seen its immigrant numbers drop dramatically in the last decade.
In fact, Mexico is now more of a victim of illegal immigration passing through from countries as diverse as Honduras, Haiti, India and Somalia than it is a sender of illegal immigrants to the U.S. So making Mexico pay for the border wall in any form would appear to be counter productive.
"The devil is going to be in the details in all of this," Davis told 1200 WOAI news. "What gets taxed and how it gets taxed are things we don't know, and which will make a huge difference."
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