The recent imposition of 25% tariffs on imports from Mexico by President Donald Trump is expected to have significant economic repercussions in South Texas, leading to increased prices and potential job losses across various sectors.
Higher prices at the grocery store will be painful for South Texas families already dealing with tightening budgets. But in addition, retail businesses in South Texas will likely experience weakening demand and shrinking profit margins. This may lead to potential layoffs within the retail sector.
South Texas hosts numerous manufacturing facilities that depend on cross-border supply chains. For instance, the Toyota plant in San Antonio assembles vehicles using parts imported from Mexico. The increased costs due to tariffs may force such plants to reduce production or consider layoffs. The Perryman Group estimates that a 25% tariff on Mexican goods could cost the Texas economy $145 billion, with manufacturing being one of the hardest-hit sectors.
The agriculture sector in South Texas is vulnerable, especially with Mexico's retaliatory tariffs on U.S. agricultural products. Texas's substantial exports of cotton and poultry products to China are now subject to heavy tariffs, which could lead to reduced demand and potential job losses in these industries.
The energy industry, particularly oil refineries in the region that process Mexican crude, could experience disruptions due to the tariffs. Increased operational costs might lead to reduced output and job cuts.
The Trump tariff war with Texas’ s top trading partner is poised to affect multiple industries in South Texas, with manufacturing, agriculture, retail, and energy sectors facing the most significant risks of job losses. But it’s not clear what the objective is for Trump in imposing the tariffs and it certainly doesn’t accomplish what one of his top campaign promises, to stop inflation and lower prices.
Guest:
Ray Perryman Ph.D. is a distinguished economist and the President and CEO of The Perryman Group, an economic research and analysis firm based in Waco, Texas. Perryman has led over 1,300 impact and public policy studies, contributing to significant economic development initiatives and public policy decisions.
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This interview will be recorded on Wednesday, March 5, 2025.
