Economist warns Trump tariffs would cost Houston dearly

HOUSTON – Houston Public Media report that President-elect Donald Trump has pledged to slap 25% tariffs on all imports from Mexico and Canada as soon as he takes office, as well as an extra 10% fee on all imports from China – the latter coming on top of tariffs Trump instituted on China in his first term and which were maintained by President Joe Biden. Those tariffs could have serious consequences for the Texas economy and for the Houston area specifically. “The impact would be quick, sudden, and sure, with inflation raging across the economy over the first several months,” said economist Ed Hirs, energy fellow at the University of Houston. Hirs said the prices of Mexican imports would spiral everywhere from the produce departments of grocery stores to automobile dealerships. Then, there’s the 4 million barrels of crude oil per day imported from Canada.

“Generally, we count on that to run many of our refineries in the United States,” Hirs said, “and that would lead to an immediate increase in the price of gasoline and diesel. It would also lead to a price increase in crude oil in West Texas as well.” Mexico, Canada and China collectively accounted for more than 43% of Texas’ total exports of goods last year, or roughly $192 billion. Even that understates the dependence of Texas on those three countries, because it doesn’t include exports of services or foreign direct investment. Hirs said if Mexico, Canada and China respond with tariffs of their own, or by reducing their purchases of U.S. imports, it would send the U.S. into a deep recession. He pointed to how China responded to the first round of Trump tariffs. “We saw China retaliate in the first Trump years by refusing to buy U.S. grains, and as a result, it was devastation across the farm belt,” Hirs said. “Farmers lost their homes, lost their fields, lost their properties. Some lost their lives.” Much of that agricultural trade with China moves through the Port of Houston.