Impact of Tariffs on Texas Businesses: An Overview
Reports from the Federal Reserve Bank of Dallas indicate that local businesses in Texas have experienced a noticeable slowdown in revenue growth since late last year. This trend has raised concerns regarding President Donald Trump’s tariff policies and the potential for an economic recession.
Tariffs and Their Effects on Revenue
As one of the primary trade states in the U.S., Texas is significantly affected by the increased tariffs on imports from major trading partners, including Mexico, Canada, and China. The report highlighted that almost half of the businesses surveyed expressed worries that rising costs related to these tariffs could stifle consumer demand and exacerbate economic slowdowns.
Market research revealed a sharp increase in uncertainty among manufacturers and service sector companies, with the uncertainty index reaching heights not observed since the pandemic’s peak in late 2022. Many manufacturers reported challenges in maintaining production levels, while the Texas service sector has seen revenue growth dwindle to zero as of March 2025.
Economic Projections and Job Losses
According to an analysis by the Trade Partnership Worldwide, the tariffs could potentially cost Texas businesses up to $47 billion and reduce the state’s GDP growth by around 1.5 percentage points. This decline in economic activity may lead to the loss of approximately 100,000 jobs across various sectors.
Expert Insights
Tony Payan, executive director at the Center for the U.S. and Mexico at Rice University’s Baker Institute for Public Policy, stated that Texans would be significantly impacted by the tariffs. He explained that a substantial portion of Texas’s agricultural produce—ranging from cucumbers to avocados—originates from Mexico. Thus, tariffs on these products could lead to inflated prices with no readily available alternatives, complicating inflation control.
Payan emphasized the need for stronger advocacy from Texas government officials, arguing that more assertive efforts should be made to contest the impacts of tariff policies at the federal level. He noted, “They’re too quiet, and there is too much economic activity at stake being put at risk.”
Trade Dynamics and Tariff Reactions
In 2024, Texas engaged in $850 billion worth of trade, with Mexico as its largest trading partner, accounting for $281 billion. Increased import costs due to tariffs will likely have ripple effects across numerous industries along the Texas-Mexico border.
Recently, President Trump imposed a new baseline tariff rate of 10% on all U.S. imports alongside specific duties targeting certain countries. This announcement has ignited discussions among Texas political leaders.
Political Responses
U.S. Representative Roger Williams, R-TX, defended the tariffs, asserting they would create benefits for American industries. In a statement on social media, he remarked that previous policies have disadvantaged the U.S. auto sector, suggesting that the tariffs would “increase competition, boost revenue, and bring back American jobs.”
Conversely, San Antonio Mayor Ron Nirenberg has expressed opposition to these trade policies, highlighting the risks to job security. During a trade summit, Nirenberg stated that such tariffs could threaten hundreds of thousands of jobs, specifically mentioning that “one in five jobs in Texas depends on international trade.”
Conclusion
As Texas navigates the complexities introduced by new tariff policies, key stakeholders underscore the precarious balance between protecting local industries and sustaining economic growth. The evolving economic landscape will be closely monitored for its ongoing impact on Texas’s business environment and job market.
Disclosure: Rice University and its Baker Institute for Public Policy are financial supporters of The Texas Tribune, a nonprofit news organization.
