DALLAS — If President-elect Donald Trump makes good on his threat to start charging Mexico and Canada a 25% tariff on all products coming into the United States, Texas could be on the receiving end of an economic body blow.
Mexico is Texas’ largest trading partner, while Canada comes in second.
Renowned economist Ray Perryman says the tariffs could cost the state tens of billions of dollars and hundreds of thousands of jobs.
“Texas alone would lose about 370,000 jobs if something like this came into place and stayed in place,” Perryman said on Y’all-itics. “It has the potential to have profound impacts. We're looking at about a $47 billion loss in gross product in Texas.”
President-elect Trump says he wants those countries to do more to stop undocumented immigrants from coming into the U.S.
If the 25% tariffs were to become reality, the Perryman Group crunched the numbers to determine the impact.
And it’s severe.
According to the economic and financial analysis firm, Americans would be paying an extra $20 billion for food products, $19 billion more for trucks and cars, an additional $22 billion for electronics, and another $18 billion for oil and other petroleum products.
“So a lot of things that we use every day filling up our cars, driving our cars, owning our cars, eating, you know, our phones, our devices, our televisions, all of those things come into play when you start talking about these countries, because it's a huge amount of economic activity,” Perryman said.
These 25% tariffs would also threaten the free trade agreement between the United States, Mexico and Canada, known as the USMCA, initially proposed by then President Trump in 2018 and taking effect on July 1, 2020.
Because of that agreement, Perryman says we essentially enjoy free trade back and forth between our countries, with a few exceptions.
But the tariffs, he says, would almost certainly lead to retaliation by Mexico and Canada.
“If everything that crosses the border is subject to a 25% tariff on our end, that's not free trade. That's the exact opposite of free trade,” Perryman warned. “I mean, just looking at the numbers, we see it lowering the GDP (gross domestic product) by almost 1%, about $250 billion, if this thing went in effect, and stayed in effect. Losing almost two million jobs in the country. I mean, it's a very major situation.
What’s more, Dr. Perryman says tariffs would lead to inflation and the Federal Reserve might have to start raising interest rates again. He also explains how 25% tariffs would threaten the “Texas Miracle” of economic growth. But the economist says as a practical matter, once everyone realizes just how costly the tariffs are, some solution would likely be found quickly. Listen to the entire episode to learn more. Cheers!