A U.S.-Mexico Border Tariff Could Cost Us All, Experts Say

It's been a lousy week for U.S.-Mexico relations, by all accounts. And it could get worse — Texas alone does about $100 billion in annual trade with Mexico.Consequently, the state's economy could be seriously affected if President Donald Trump follows through on a threat to impose a 20 percent tariff on Mexican imports.Trump threatened to impose the tariff after Mexican President Enrique Peña Nieto canceled his trip to meet with the Trump administration on Tuesday. The cancellation came in the wake of Trump's executive order to begin immediate construction of a border wall.But the Trump administration appeared to walk back its threat of a tariff on Mexican imports late Thursday. Press secretary Sean Spicer said it was just "one idea" to pay for the wall.Many economists and business leaders seemed clear about the fallout: The U.S. is shooting itself in the foot and is sending a strong negative message to Mexico."We move in a world in which a whole production and supply process is totally integrated," said Michael Davis, economics and finance professor at the SMU Cox School of Business."We send materials to Mexico, they get processed and then sent back and forth to the U.S. Supply chains have developed to accommodate that continentwide process. A tax is going to cause all kinds of disruptions in the whole production-supply chain."In addition, Davis said the U.S. has worked to help Mexico develop economically and become democratic. "And now we're telling them we don't really care."More important, though, could be the potential for a trade war where nobody wins, and everyone loses, experts say."This will hurt consumers and workers alike, and Texas is the No. 1 exporting state in country and has the most to lose," said Bill Hammond, former CEO of the Texas Association of Business and now head of his own public advocacy firm, Bill Hammond & Associates."The first shot in a trade war is a bad idea."And it would come at a very bad time, Hammond said, when we need to be building a better relationship with Mexico."Their economy has grown. Our economy has grown, and this action could bring both economies down. The people of Texas and America will pay that tax. Not Mexicans."Most Americans simply don't realize that the economies of Texas and Mexico are deeply intertwined, said Luisa del Rosal, director of the Mission Foods Texas-Mexico Center at Southern Methodist University.In addition, should Congress approve the tariff, an overall tax on all Mexican imports would go against what was legally agreed to under the North American Free Trade Agreement, which has certain products with a zero or low rate, del Rosal said."Therefore, either virtually nullifying NAFTA, overriding it or canceling it could result in Mexico imposing the same level of taxes, resulting in a trade war, and ultimately hurting consumers and the general public."And Texas would be affected the most if NAFTA goes away, she said.The No. 1 beneficiary of NAFTA is Texas, she said, and it would feel the impact of an unstable economy in Mexico."We will see a rise in immigration flows from Mexico, and economic instability in Mexico is a national security issue for the U.S.," she said.For Victoria Neave, Democratic state representative for District 107 in Dallas County, the unstable climate that has been created by Trump's push for a wall is real and damaging on many levels."It's about jobs, foreign policy, good diplomatic relations with our neighbor," Neave said."It's also about the symbolism. It's more than just a wall. It says, 'You're not welcome here.' And that's going to have an impact on our local communities."Twitter: @molivera79  Continue reading...

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