President Trump's announcement that he plans to impose a 5% tariff on all Mexican products coming into the United States by June 11 as a way to 'punish' Mexico for its alleged failure to act to stop the flood of illegal immigrants from Central America into the United States has prompted concern and anger in Texas, which is the largest trading partner with Mexico, News Radio 1200 WOAI reports.
SMU economist Mike Davis says this flies in the face of the current NAFTA trade agreement, and threatens the fate of NAFTA's successor, the U.S. Canada Mexico Trade Agreement.
"We have a trade agreement in place, and we have another one that's been negotiated and they have agreed to," he said. "This looks very much like we are changing the terms of the agreement. You can't just tell your friends you are do one thing and then just pull the rug out from under them and do something else."
Texas is the major importer of products from Mexico, with such robust trade that Laredo just passed Long Beach to become the largest single port of entry in the U.S. From agricultural commodities to produce to electronic equipment to oil and gas to cars, all pass between the two countries every day.
Paola Avila, chair of the Texas Border Trade Alliance, says the tariffs are exactly the wrong thing to do in this situation.
"Establishing tariffs on our friends, neighbors, and trading partners is exactly the wrong policy to pursue," she said. "The president’s plan, if executed, will do tremendous harm to our relationship with Mexico, to our country’s ability to adopt new trade agreements going forward, and to U.S. consumers, who will be the ones who will pay for these tariffs. Tariffs on Mexican imports are totally and completely unnecessary.”
Davis says it is the American and Texas consumer, not Mexico, which will pay the price.
"Tariffs remembers are not taxes on foreigners, they are taxes on Americans," he said. "Basicallty, what President Trump is doing is imposing tax increases."