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Tariffs of 25% on steel and aluminum imports from Mexico went into effect on Monday. If a deal is not struck by the end of the week, 30% tariffs could be imposed on more industries on Friday.
Texas businesses are watching closely. Nearly a third of the state's global commerce is conducted with Mexico, and the region has become a tightly woven production ecosystem.
“What Texas and its neighboring Mexican states built over the past few years is a joint production platform, meaning they don’t just trade with each other — they build things together,” said Diego Marroquín, a trade expert with the Wilson Center.
Texas has evolved into the main artery of U.S.-Mexico trade. That platform includes everything from auto parts and electronic components to agricultural products like berries and avocados.
The Port of Laredo, which in recent years surpassed California’s ports to become the busiest in the U.S., embodies this integration. Trucks cross the border daily carrying partially assembled goods that will be finished on the other side. Those goods are then shipped to markets across North America and beyond.
The 30% tariff, if enacted, could damage the automotive industry, which is especially vulnerable. A single vehicle may contain components that cross the border multiple times during production. A tariff at every crossing could make entire operations financially unviable.
Tariffs are not new in U.S.-Mexico relations, but the current situation is different, analysts said, because of how tightly linked the two economies have become. Joint ventures are now the norm. A car made in Texas might include engines from Saltillo and wiring systems from Chihuahua. Blueberries grown in Michoacán are processed in McAllen. Cattle raised in Coahuila are slaughtered and packed in Laredo.
Tariffs could disrupt the logistical setup of North American manufacturing.
“Tariffs are detrimental to the U.S. economy, to the region’s competitiveness, and they increase prices across the joint production platform,” Marroquín said. “They also violate the spirit of the USMCA trade agreement, making future collaboration harder.”
The USMCA, which replaced NAFTA in 2020, was intended to provide long-term stability and modernize trade rules between the U.S., Mexico, and Canada. It is up for “review” in 2026. But Marroquín said the recurring threats of tariffs and the politicization of trade may make July 1, 2026, a “renegotiation.”
Beyond the direct economic impact, business leaders are feeling the pressure of uncertainty across the region slowing investment. If companies don’t know what tariff rates will be in a month, or in the coming days, they can't make informed decisions about where to build new plants or expand production.
“It’s basically impossible to plan an investment in a tire factory in Texas or an electronics plant in Nuevo León if you don’t know what the tariff rate will be tomorrow,” Marroquín explained. “Right now, we have a 25% tariff, but it might rise to 30% on Aug. 1 or change again two months later — or after a tweet.”
The uncertainty is particularly costly in Texas, where small and medium-sized businesses are deeply involved in cross-border trade. These types of businesses do not have the resources to absorb sudden cost hikes or reconfigure supply chains quickly.
Mexican President Claudia Sheinbaum has called the tariffs “unjustified” and warned that Mexico will issue retaliatory tariffs if a resolution is not reached by the Aug. 1 deadline.
On July 12, President Donald Trump sent a letter to the Mexican government, which he also posted on Truth Social, claiming Mexico wasn’t doing enough to stop fentanyl trafficking.
As the two countries negotiate, tariffs on tomatoes as well as steel and aluminum have taken effect over the last two weeks.
“The main objective of the Mexican government right now is to negotiate a tariff level that’s fixed,” Marroquín explained. “That would at least allow businesses to plan.”
If the additional tariffs go through, experts said U.S. consumers will feel the impact of higher prices for cars, groceries, and household electronics within weeks.
In the longer term, the credibility of the USMCA is on the line — and the sustainability of the interconnected production system both countries have spent decades building.
Whether a deal is reached by Friday or not, Marroquín said tariffs are now a part of that equation. “I don’t think tariffs are going away,” he said. “I think tariffs are the new normal.”
